How to Increase Your Chances ofGetting Approved for a Mortgage
In a previous article, Credit Firm discussed the importance of fixing your credit and paying your debts in order to buy a house. While that is important, there are also other factors to consider when looking to get a mortgage approved. Aside from credit and debts, here are some other steps to take:
1. Update your documents
Before meeting with the lender, make sure all your necessary documents are in order. This will reduce the requirements needed by lenders, thereby speeding up the application process. Bankrate compiled some questions to expect from lenders including the paperwork they usually ask from applicants. In general, you will need to present documents to prove your annual income, additional earnings, debts, and assets.
2. Maintain a good savings history
The key to gaining your lender’s trust is to prove you are capable of saving money. For that to work, you will have to avoid making major purchases. Hold out until after the approval. Also, your savings will come in handy for two purposes: firstly, it will be used for your down payment, and secondly, it can be used to cover other requirements in your application.
3. Make a large down payment
Most first-time buyers worry about coming up with the 20% mortgage down payment. However, the Los Angeles Times notes that most people don’t follow that practice, as 54% of all buyers over the last five years put down less than 20%. However, it was stressed that there are many benefits to depositing 20% as a down payment, including lower monthly payments and lower mortgage interest rates. Big deposits will help you reach mortgage approval faster, but as mentioned earlier, you should still leave enough funds for other expenses.
4. Ensure your employment is stable
Since lenders will need proof of your income, it’s recommended to stick with your employer during the home buying process. Being self-employed or failing to hold down a permanent position for a long period of time will not leave a good impression on them because they will see the loan as a risk.
Furthermore, the first set of accounts may take over a year to be audited. Some lenders will even request two years’ worth of accounts. In short, do not apply for a mortgage if you plan to shift jobs in the near future.
5. Seek expert advice
You have the option to ask for help from HUD-approved housing counselors, who are trained and certified by the government. Housing counselors will assess your financial situation and help you determine your options if you have problems with loan payments. You can use the Consumer Financial Protection Bureau’s Find a Counselor tool to get a list of HUD-approved counseling agencies near you.
Aside from counselors, you can also ask assistance from licensed CPAs when it comes to financial matters. Maryville University’s summary of its bachelor’s degree in accounting revealed that trained accountants will be able to give sound advice on financial planning and management. They are equipped with knowledge of financial reports, income taxes, and auditing, so they will be able to help you with your unsettled accounts, tax liabilities, and other shortcomings. In case there are any other complex problems with your mortgage application that you can’t solve on your own, seeking expert advice is your best bet.
As mentioned at the start, a key part of speeding up the mortgage application process is keeping your credit in check. On that note, consider Credit Firm’s services, since we offer an easy 3-step process for you to fix your credit. Keeping all these tips in mind, you may be able to get your mortgage loan in less time.
Article composed by Sophie Morgan for creditfirm.net