Getting a mortgage loan approved is a completely different ball game compared to, say, getting a car loan or a personal loan. Many applicants, however, don’t realize this and are often disappointed when their application is denied by a lender. Given this, we’ve listed out a few expert tips to help you get your loan approved.
- Check your credit score: It only takes a few minutes for you to get your credit score and credit report. But, most home buyers never actually check their credit score before submitting their application. The thing is, the lender’s decision to approve your application and how much interest to charge you is primarily dependent on your credit score. So, if your credit score is under 680, it’s best to wait until it has improved and then apply for the loan.
- Save up: If you get a loan from a commercial bank, you’ll need to make a down payment of at least 20%. In addition, you’ll also need to pay the closing costs. But apart from this, lenders also like to know that you have some surplus savings in your account to make your monthly payments in case you stop earning a steady income. So, make sure to save up.
- Stay employed: Don’t take up a new job or quit your current job if you are looking to get approved for a mortgage loan. Employers like to see a steady employment history, so changes to your job or income status can delay the mortgage process significantly.
- Avoid new debts: You don’t need your credit cards to have a zero balance, but you should avoid getting a new loan or building a credit card debt since it can increase your income-to-debt ratio, which lenders consider as well. If you can, try to pay off at least some of your smaller debts.
- Get pre-approved: Getting pre-approved for a mortgage does not ensure that your final application will be approved, but it does increase the chances of approval. Also, once you are pre-approved for a loan, you’ll find out the exact interest rate that you will be charged, making it easier for you to compare different loan offers.
It’s important to work out how much you can afford to pay on a monthly basis. Don’t make the mistake of letting the lender dictate how much you can spend or borrow. The pre-approved limit only indicates the maximum amount that you can borrow from the lender; if you think the monthly payments are too high, you can always opt for a much lower loan amount.
