Becoming a homeowner is a milestone in the life of any adult. Making the jump from renting to owning represents an important step on the road to financial security, and for most people, a home is the investment of a lifetime. However, before receiving the keys to your first house, you’ll need to be approved for a mortgage. Furthermore, even if approval seems like a slam dunk, there are a surprising number of factors that could work against you. To increase your odds of landing your ideal mortgage, put the following pointers to good use.
Before applying for a mortgage, you’ll need to carefully study your personal credit score. Many people who believe that their credit is top-tier are presented with unpleasant surprises when viewing their actual scores. As such, it’s imperative that you have a look at your score before speaking with prospective lenders. Whether studying your credit score confirms what you already believe or throws you a curveball, the information contained therein is central to the success – or failure – of your mortgage applications. Fortunately, obtaining your credit score couldn’t be easier in the digital age. With countless online resources dedicated to pulling up credit scores in a timely manner, getting the information you seek shouldn’t take more than a few minutes.
In addition to seeking out your credit score, you should also study up on mortgage rates in your desired locale. For example, if you’re curious about mortgage rates in NJ, you can either head to a highly-rated bank or consult an abundance of online resources.
When reviewing mortgage applications, lenders pay special attention to applicants’ track records on bill payment. After all, if an applicant is unable or unwilling to pay other bills on time, why would they see fit to keep up with their monthly mortgage payments? That being the case, it behooves prospective homeowners to stay current with rent, credit card payments and other monthly obligations. A history of late payments and/or unpaid bills is often a black mark against mortgage applicants, so the next time you’re tempted to let a monthly payment fall by the wayside, consider how this stands to affect your home ownership prospects.
A sizable amount of outstanding debt is liable to kill your chances of mortgage approval. As previously stated, lenders typically don’t take chances on applicants with a history of debt. With this is mind, make a point of paying down any outstanding debt before even requesting a mortgage application. Unfortunately, this can take a fair amount of time and force applicants to put their dreams of home ownership on hold. While nobody relishes having to wait for the things they want, this will ultimately increase your chances of approval. Alternatively, if you simply can’t wait to start submitting mortgage applications, a short-term loan from a trusted friend or family member may be worth considering.
To ensure that your credit score looks as good as possible throughout the application process, put any large purchases on hold until after you’ve been approved. For example, if you’ve had your eye on a new car, heavy-duty appliance or home entertainment center, exercising restraint will work to your benefit. Putting these types of purchase on your credit card stands to put a damper on your chances for approval.
Coupled with a favorable credit score, a sizable down payment can effectively sway a lender’s opinion. A willingness to put forth a large down payment tells a lender that you’re unlikely to suddenly stop making monthly payments and allow a home to enter foreclosure. After all, who would want that much money to go to waste?
No feeling compares to the satisfaction of being handed the keys to your first home. For many adults, home ownership represents the culmination of years of hard work and financial responsibility. Barring a substantial financial windfall, anyone looking to make the jump from renter to homeowner needs to be approved for a mortgage. While the mortgage application process can stressful, there are a number of steps prospective homeowners can take to help their chances of approval.