Things that lead to mortgage approval
Qualifying for a mortgage loan often becomes complicated and unmanageable especially if you are applying for the first time. Here is a list of things you should know that will help you in getting your mortgage approved.
Check the Eligibility
Estimating whether you will be able to qualify for a mortgage or not before even applying is called as pre-qualification.
Whereas, after applying if the lender tells you that you will be able to qualify is called pre-approval.
Once you get pre-approval, you will get a final approval when the loan is applied on the property you are choosing to buy.
When you have to qualify for loan it is always better to check on your behalf beforehand, whether you will be able to get pre-approval from the lender or not. i.e., do a pre-qualification check.
Amount of Loan Approved
The amount of mortgage approved by the lender depends on the down payment you will be giving, and your current income. Lenders in usual case approve the loan if the monthly income of borrower is at least 28% to 44%.
Credit score
Whether your mortgage will be approved or not majorly depends on your credit score. Lenders can easily obtain your credit history and form a credit report from it. This credit report is used to obtain a credit score. The higher the credit score, the more chances will be of getting mortgage loan approved. Credit score depends on the how well you have been in the past when you took loan. Did you pay credit cards fee on time? Do you have any negative credit information? All these issues represent your credit history and impact on your credit score
Steps to take
Getting your mortgage loan approved might seem difficult for the first time. You would probably face some technicalities and issues in getting your loan approved. Some of the things you should do to prepare yourself in the beginning are
- Repair your credit score
- Save money now to put more down payment. It will lower the duration and amount of mortgage.
- Reduce any loans if you have on you.
Try a Different Mortgage Lender
Finally, if you cannot get your loan approved, you should apply at some other mortgage dealer. Sometimes, one mortgage lender might reject you but the other will say yes. Find the issues that led to your application rejection and plan your next step accordingly.
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