Buying a home is considered by many of us as one of the biggest and major financial
investments they will have to make. And since almost 99% of us are not capable of
buying a home outright in cold cash, this kind of situation calls out our attention that
of loan either from your trusted bank or any other financial institution that offers a
mortgage or money lending program. However, the probability of your loan application
getting approved here may sometimes depend upon how stellar your credit rating is.
You have a reason to be optimistic though if you happen to have an outstanding
credit rating.
There is a myriad of mortgage options out there, and if you are among the millions of
first-time homebuyers, you may lose track of what you should pick because there are
far too many options you can consider to choose. If you have any plans of buying
yourself or your family a residential property anytime soon, you can make use of the
following tips to help and guide you on this process. You should anticipate that there
is so much drudgery in getting your mortgage application approved, so getting
these points now would help you get prepared.
Know Where You and Your Credit Rating Stands
Not many people are aware of this, but credit rating and credit activity are both
influential factors that will determine whether your mortgage application will
get an approval or if it is likely to be declined instead. There is nothing unusual
on this but lenders usually would require a borrower to have a minimum credit
rating first before they would even consider taking a look at their mortgage
application.
If you happen to have a derogatory credit rating, it is likely that your mortgage
application will be denied. You can actually prevent this from happening and to
do that you should be prompt in paying your bills, and in lowering your debts.
But if you are in doubt of your credit rating, you can report it to have it looked
into by the proper body and rectify the same if they identify an error somewhere.
Save Some Good Amount of Cash
Depending on the kind of loan that you are seeking for, lenders may necessitate
that you make an initial down payment first. If you have a good amount of savings
and are capable of making a bigger down payment, more than the minimum
amount the lender is asking, then you should proceed to do so. This will help
pull down your balance, even your private mortgage insurance premium.
Do Not Go on Job Hopping
If you are working, do your very best to stay in your current job. If you have been
in the habit of hopping from one work to another, it may actually send the wrong
signal to a lender and paint you as a high-risk borrower. Keep in mind that your
lender will approve or decline your loan application based on the merits of the
documents that you will present to them, this will include your work and credit
rating history.
Pay Your Debts and Avoid Getting New Debts
When you are applying for a mortgage loan, it does not automatically mean to
say that you need to have a zero credit card balance. But it is going to be for your
best interest when you owe less. Remember that your debts, the more you have it,
the lesser chances that you have in getting your mortgage application approved.
Additionally, if you have several credit cards see to it that you don’t have active
debts on all of them as doing so will render your debt ratio high. This might cause
your prospective lender to deny your loan request or to give you a lower mortgage.
Nonetheless, even if you happen to get an approval for your mortgage loan request
while you still have active debts, it is highly recommended not to incur new ones
anymore. Prior to the phase of mortgage closing, your lender may do another
round of audit of your credits and if they see that you incurred new ones, they
may decide not to proceed anymore with the closing.
Know Exactly How Much You Can Afford
This point is self-explanatory. When planning to buy a property or a house for
yourself, see to it that you are choosing a home that will really fit your budget for
this. While there really are lenders out there who are willing to lend money to
borrowers even if they know it is not affordable for them, be smart on your decision.
They may just be after the profit and would dismiss the thought that you would have
a hard time on it. See to it that you are going to live within your means and you
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