Getting approved for a mortgage can seem tough, especially when you don’t know where to begin. There are many potential lenders out there and a seemingly endless number of steps to take for approval. We are going to simplify this with the following seven tips for getting approved for a mortgage.
- Improve your credit
Regardless of the lending institution, your credit score is the primary factor that will be considered when you apply for a mortgage. As such, your credit history needs to be as clean as possible.
Even if your credit score isn’t perfect (or if it’s bad), it isn’t too late. Before you apply, take the time to improve your credit score. This can be done by taking simple steps like:
- Removing errors on your credit report (contact the credit bureaus)
- Getting a credit card or other form of credit to establish your history
- Reducing your overall debt — especially credit card debt
- Asking collectors to remove negative marks in exchange for paying off debt
- Furnish details of your financial history and budget projections
As an applicant, it is your job to make the lender feel as comfortable as possible with supplying a loan to you. You need to get your financial history together as if you were preparing for a tax audit. In addition, be sure to provide accurate projections for your future personal budget. This will show that you are already prepared to consistently make your monthly mortgage payments. When doing this, try to keep your total expenses below 40 percent of your gross income.
- Don’t just look to banks as potential lenders
Getting approved for a mortgage means looking at all of your options, and banks are not the only option here. However, many prospective homeowners make the mistake of only applying to banks for mortgages. There are many other financial institutions out there that can supply the mortgage that you need, often without all of the red tape normally associated with bank loans.
- Talk to a real person
While you may want to begin a digital mortgage application online, you should also follow up with a real person. Talking one on one gives you the chance to show the lender your financial history and budget, as well as discuss your mortgage requirements so you can find a product that suits your needs.
- Consider shrinking your budget
The smaller the mortgage, the more likely you are to get approved. Consider searching for a less expensive home.
- Provide the biggest down payment possible
As we just mentioned, the size of the mortgage is a big determining factor for lenders. The size of the loan is determined by how much they have to give you, and putting more cash down reduces this number.
- Don’t assume that the word ‘no’ is universal
One of the biggest mistakes that prospective home buyers make is giving up. How lending institutions make their decisions varies wildly, so one lender’s answer will not necessarily be the same as another’s. Despite the fact that you may have been rejected one or more times, you should keep on applying (assuming that you have done everything in your power to project yourself as a good loan recipient).
To learn more about how to get a home loan, contact Fast Access Finance
The Fast Access Finance team is here to help when you’re in need of a mortgage. Call us at 416.367.9191 or complete our private mortgage application form online.