Buying a home can be an exciting experience. However, the process of acquiring a home loan can also be the cause of too much heartache and disappointment. Educating oneself about what it takes to get approved for a home loan is key if one is to avoid some of the disappointments that are known to come about.In order to improve one’s the chances of getting approved for a home loan, there are a number things that one should always keep in mind.
Successful Home Loan Application Process and Tips
Down Payment
A down payment depending on the house one wishes to buy is a must if one is to stand a higher chance of getting a desired home loan. Getting into a lenders office with zero upfront cash is a quick way of getting an application turned down. Down payment requirement varies depending on the type of home loan one is requesting and the lender. A down payment can range between 2.25% and 20% of the total purchase price of a home. Lenders look at the amount one is willing to pay at the start, to gauge how serious they are about buying a house. A down payment also indicates whether a potential buyer will be able to pay back any home loan issued.
Ensure Your Credit Score Is In Order
Before submitting a home loan application, it is important to ensure a credit score is a true depiction of one’s credit history. Credit scores have a major impact on mortgage approvals. Higher credit scores always guarantee a successful application. Lower credit scores, coupled by several missed payments frequent lateness among other derogatory credit information, is always a major deterrent to a successful home loan application. Cleaning credit history beforehand and fixing any errors is thus essential if one’s home loan application is to go through.
Proof of Income
A proof of a consistent income is another thing that lenders always look for, before approving any application. Lenders approve home loans based on the information provided, with a key focus on income statements. Any changes to income status can have a great impact on the mortgage loan application process. Some lenders go the extra mile of calling employers to confirm applicant’s employment status before approving a home loan application. Self-employed borrowers are most of the time required to provide significant additional paperwork to prove their ability to pay back.
How Much House Loan Can You Afford
It is safer and realistic, to first look into your sources of income to know how much home loan you can afford. Some lenders approve applicants for more than they can afford. However, some have a restriction of between 28% and 44% of the total income that can be spent on monthly payments. There are calculators that assist in determining the mortgage loan payment one can afford. Don’t let lenders dictate what you should pay in monthly installments. Instead, pay close attention to total monthly income to ensure monthly installments don’t have a significant impact on living standards.
Get a Pre-Approval
The pre-approval process involves submitting financial and personal information to get an insight of the kind of home loan a lender is likely to approve. Pre-approvals include information on how much one can afford, the interest rate to be paid as well as the required monthly payments.
References
https://www.investopedia.com/articles/mortgage-real-estate/08/mortgage-application-rejected.asp https://www.lendingtree.com/home/mortgage/minimum-mortgage-requirements/ https://www.bankofamerica.com/mortgage/learn/how-to-get-approved-for-a-mortgage/ https://www.credit.com/loans/mortgage-questions/how-to-get-loan-fully-approved-the-mortgage-approval-process/ https://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx https://www.investopedia.com/financial-edge/0411/5-things-you-need-to-be-pre-approved-for-a-mortgage.aspx
