In the US, millions of people apply for home loans and are approved. More than that number of people are rejected, and their dreams of home ownership are shattered. You can stand out of teeming crowd and add to the number of millions who will get approved for home loans if you follow the mortgage tips below.
Understand why applicants with good credit get rejected. With the recession, california mortgage companies have tightened up by several banks and applicants with good credit scores find themselves rejected. Debt to income ratio can constitute one of the reasons applicants with good credit are denied their mortgage loan application. Lenders usually do not want borrowers to spend more than 38 percent of their monthly income to pay for their mortgage. Some lenders can be flexible enough to allow borrowers pay up to 45 percent from their monthly income. But such cases are becoming rare. You'll know where you stand if you calculate your own debt to income ratio before you apply for a mortgage loan.
Monitor the Way You Use Your Credit Cards
Banks want to be certain that you are a responsible borrower, so they check how you handle your credit cards. Exceeding 40 percent of your balances can be a sign that you might not be the right candidate for a loan. So, before you apply for a mortgage loan, make sure that your balances are reduced to the minimum threshold. This will improve your chances of approval for a loan.
Avoid Submitting Applications to Multiple Banks
Some people are tempted to think that applying to multiples banks will increase their odds of getting an approval. Some experts think it is better to research and submit applications to one or two banks, which will reduce credit inquiries. Note that many credit inquiries can take off points from your credit report. You want your credit ratings to remain solid, so you don't want to get many hard inquiries.
Think About Putting a 20% Down Payment
An active credit score of at least 580 and a 20 percent down payment will increase your chances of getting approved for your home loan. You may want to wait until you have saved up enough to pay for the down payment before you apply for the loan or you can explore other options like taking a loan with high monthly payments and insurance attached to it in the event that you default. Get more info here.
Get Preapproval for the Loan
Try to get a preapproval letter before you start looking for a loan. This means that you have to have your credit run and submit the required documentation to the bank before you can get preapproval for the loan. The preapproval will let you know how much the bank can lend you. This allows you to proactively work out how much you will need to pay for down payment.
Getting approved for a mortgage can be a long and stressful experience for most people, but if you understand what banks are looking for, then you can prepare yourself to get the best results. The above mortgage tips can help you get the loan for your dream home in no time.
Monitor the Way You Use Your Credit Cards
Banks want to be certain that you are a responsible borrower, so they check how you handle your credit cards. Exceeding 40 percent of your balances can be a sign that you might not be the right candidate for a loan. So, before you apply for a mortgage loan, make sure that your balances are reduced to the minimum threshold. This will improve your chances of approval for a loan.
Avoid Submitting Applications to Multiple Banks
Some people are tempted to think that applying to multiples banks will increase their odds of getting an approval. Some experts think it is better to research and submit applications to one or two banks, which will reduce credit inquiries. Note that many credit inquiries can take off points from your credit report. You want your credit ratings to remain solid, so you don't want to get many hard inquiries.
An active credit score of at least 580 and a 20 percent down payment will increase your chances of getting approved for your home loan. You may want to wait until you have saved up enough to pay for the down payment before you apply for the loan or you can explore other options like taking a loan with high monthly payments and insurance attached to it in the event that you default. Get more info here.
Get Preapproval for the Loan
Try to get a preapproval letter before you start looking for a loan. This means that you have to have your credit run and submit the required documentation to the bank before you can get preapproval for the loan. The preapproval will let you know how much the bank can lend you. This allows you to proactively work out how much you will need to pay for down payment.
Getting approved for a mortgage can be a long and stressful experience for most people, but if you understand what banks are looking for, then you can prepare yourself to get the best results. The above mortgage tips can help you get the loan for your dream home in no time.
