A home is inarguably one of the biggest investments anyone can have. At the same time, it is also an expensive investment. Needless to say, it can lot’s and lot’s of years before you can save enough to buy yourself that home you’ve for long been dreaming of. This is precisely the major reason most of us turn to banks and financial institution for mortgage financing. As a matter of fact, commercial property is even more expensive to procure or build. But then again, you don’t just walk into a bank, ask for a mortgage and expect for you to be awarded one with no questions asked. Lenders make a lot of considerations before they can even consider you for a home loan, let alone giving you a limit or the maximum amount you can qualify for. This having been said, what should you know before approaching a lender for mortgage financing? Here are 4 tips to obtaining a mortgage loan.
1. Assess your credit score
Credit history is one of the most important lending criteria that financiers consider before awarding or approving not only a mortgage, but any type of secured loan request for that matter. Your credit score is basically the measure that reflects your creditworthiness. For the conventional mortgage loan such as FHA, most lenders will only approve mortgages for applicants that have a credit score of 620 and above. To be on the right side of the fence, most financial advisors recommend maintaining a credit score of at least 680. You can easily request your credit report (which will indicate your credit score) from your local credit reference bureau, which often takes not more than a few minutes online. It is important to do this early enough before you apply for your mortgage to save time and avoid approaching your lender while your credit history has erroneous delinquencies. This way, you can clean it up in advance and make arrangements to bring your credit score up in case there are outstanding loans that you need to clear to sort out things with a particular lender.
2. Save Up as much as you can
Most lenders will require you to have saved a particular amount of money with them or with another financial organization to consider approving your mortgage loan. This is what is often referred to as the down payment. Nonetheless, the down payment minimum (as a percentage of the mortgage sort) will vary from lender to lender. This means that the more you save up, the less you will be required to pay back. At the same time, having a higher amount will also increase the chances of your loan’s, and maybe give you a stronger voice when negotiating the rates.
3. Settle your unsecured debts
Lenders will also consider the amount of debt you owe, as well as all the accounts you hold. Clear off as much debt as possible and close down any dormant accounts that you no longer intend to use. This will improve your approval chances as it betters your ability of payment.
4. Get all your necessary documents ready
Documentation is always part of the lending procedure. Lenders will hardly approve your loan without the current, consistent, and up-to-date documents. Some of these may include your identity documents such as your passport and driver’s license, proof of address, bank statements, employment letters, and so on and so forth.
With the above 4 tips, your mortgage application process just became a speck easier. You may also need to do your research well since mortgage rates may vary from one provider to the other. For this and more advice on low-rate mortgages, it pays to seek advice from mortgage brokers such as Altrua Financial.