Getting approved for a mortgage can be an intimidating process because of how much goes into it. To make this process as easy as possible, it is important that potential home-buyers do their research and control what they can control. We will take a look at three tips that can make the mortgage application process easier and lead to higher approval rates.
Know your credit score and do your best to improve it
People don’t usually buy homes in cash outright, so your credit score is very important and one aspect of you that mortgage lenders focus on the most. It gives them a good idea of your financial reputation and your worthiness of a loan. A low credit score does not mean that you will automatically not be approved for a loan, but it certainly makes this prospect more likely. If you are approved with a low credit score, the loan you will be given will likely be a percentage of what you could obtain if your credit score is high. This is why it is so important for prospective homebuyers to make sure that they know their credit score and what they need to do to fix it if it is in the dumps. It is important to start building credit early as well, so it has time to develop. You want to have been building credit for at least a few years and doing a good job of it at that. Paying bills on time and keeping your balances low are great examples of how to build credit. If you can have a 700 credit score at least before applying for a mortgage, you will definitely have better results!
Know the major players in the lending industry
Doing research on lenders will help you find the best rates for your mortgage. You should look to get several quotes by many lenders and see which one works best for you and your situation. It is also important to know about the different types of lenders as they have their advantages. For example, credit unions usually offer more favorable rates and mortgage bankers. The more choices you look at the better the opportunities you will find.
Look to get pre-approval
Getting pre-approved is something that can give you a leg-up on other buyers. Pre-approval letters show lenders that you are very serious about purchasing. It also shows that you have gone through a financial investigation and passed. Pre-approval makes for a better applicant.
Written by Kourtney Manley, Business Analyst at OnlineApplication