Getting approved for a home loan can be challenging. It is essential to give yourself the best chance of success in your first application, as being rejected for a mortgage can make it harder to get one in the future. You should plan carefully and think through your options to be sure you are making the wisest possible choice.
A lender will look at all areas of your life to determine if you are a good risk. If you have significant debt, move jobs a lot or have a low down payment, this can mean that you will not be approved for a home loan. Here are some of the ways you can ensure that you get approved.
Consider A Cheaper Property
Choose a smaller, cheaper property that will require a lower mortgage. A lower mortgage is a smaller risk for lenders meaning they are more likely to say yes to your application.
Consider cheaper areas if you can’t compromise on the size of the property.
Paying Down Your Debt
Having a low debt to income (DTI) ratio can significantly increase your chances of approval.
Use an online calculator to work out your DTI ratio.
If you have significant debt, spend time paying these off before buying a property.
Finding A Co-Signer
A co-signer can help you pay your mortgage, making you a better risk for lenders.
They do not need to live with you, but their financial reliability will help support yours.
This is a good option for anyone with a low income.
Lenders Giving Back To Ex-Military
If you have served in the military, you could get a government-guaranteed VA loan without a down payment.
For more information, take a look at the Hero Loan Program.
Hero Loan is dedicated to delivering the best possible home loan services to those who have served in the military.
Choose Your Timing Wisely
Consider the current economic climate and research conditions in the lending market.
It can be better to wait for more favorable conditions such as low-interest rates or housing prices.
Save More For Your Down Payment
The bigger your down payment, the more likely you are to be accepted for a mortgage.
A sizable down payment means the financial organization will have to lend you less.
It will also show that you are capable of handling money wisely.
Shop Around For The Right Lender
Not all lenders have the same criteria for accepting mortgages.
Shop around to find a lender that suits your circumstances.
Consider smaller, local banks that may have more favorable terms for locals than larger organizations.
Use Credit Properly
You need a credit history to be approved for a mortgage.
Consider opening a secured credit card with a small limit and pay off the balance each month to build a good credit history.
Do not open too many lines of credit, as this can negatively impact your credit.
Live In A Rural Area
If you are willing to live in a rural area, you can receive low to no deposit mortgages from the United States Department of Agriculture.
You will need to select an eligible property to qualify.
Resources:
https://www.wellsfargo.com/goals-credit/smarter-credit/credit-101/debt-to-income-ratio/
https://www.experian.com/blogs/ask-experian/how-to-use-a-credit-card-to-build-credit/