In the past few years, the average homebuyer has seen much less competition when it comes to getting a mortgage loan. In fact, with the credit crisis, banks were looking for applicants that scored better than 700 on the FICO score, and up to 10% of applicants were denied a loan. With high-paying jobs and low unemployment rates, the mortgage market is now easier to get into compared with previous years.
What is a Mortgage?
The mortgage is a debt instrument used to finance the purchase of the property. It is the most common type of debt used to buy real estate throughout the world. There is a lot that goes into getting a mortgage, from the type of realtor you use to how much you make and what your payment is, to the type of home you live in, and how much you can get in down payment
What things to do to Helps Your Chances of Being Accepted For a Mortgage?
If you’ve been trying to buy a house for a while now, you’ll be relieved to know that it’s never too late to get a mortgage. In fact, your odds of getting approved for a mortgage are much better today than they ever have been. Not only do we have more lenders accepting offers from more people, we have more types of mortgages to choose from. In fact, there are currently 29 mortgage loan programs available. Here are some things to do to help improve your chance.
- Check Your Credit Report
When applying for a loan or credit card, you’re required to complete a Consumer Credit Report. This report will give you an idea of how you’ve been managing your finances and hopefully prevent you from getting a loan you can’t afford. This is why it’s important to not only pay your bills on time but also to keep your credit report up to date.
- Fix Any Mistakes on your credit
In today’s real estate market, what is the essence of purchasing a home? To start, it’s all about getting a fairly priced home that fits your needs. Even with this, there are still many other factors to consider when buying a home. One of the most important is the lender. It is important to find a lender that is willing to provide you with a loan even if you have a few mistakes on your credit report.
- Improve Your Credit Score
Credit is a nice thing to have. Whether it is for a house, a car, a line of credit, or even a student loan, you are required to have at least some to get going. The more you have, the better. That is why many people focus on building a credit score, which is a way of measuring the strength of your financial health, but there is another type of credit that can be just as valuable: income to debts.
- Lower Your Debt-to-Income Ratio
One of the keys to having a successful mortgage application is a low debt-to-income ratio. When banks see your debt-to-income ratio in your prequalification package, they use it to determine whether you are a good risk for the loan you want. You may be tempted to think that a lower debt-to-income ratio is a ticket to getting a lower interest rate. Let’s say you have a $150,000 loan with a $30,000 mortgage, and you have a debt-to-income ratio of 30 percent. You may assume your loan officer will only give you a 10 percent interest rate since they only want to give you the best deal they can.
- Make a large down payment
First things first, there is no reason to let a small down payment hold you back. If you have the savings to pay for a home, there is no reason to worry about qualifying for a mortgage. There are several ways you can increase your chances of being approved for a mortgage and still buy a home with a smaller down payment. One of the best ways to do this is to look for a mortgage that offers a large down payment. This can be as much as 10% of the purchase price of the home. This is still smaller than the 20% of the purchase price that the FHA requires, but it is better than nothing. There has been plenty of news lately about how millennials are refusing to buy homes.
It’s interesting to note that a significant number of the millennials who decided not to buy homes were people who could have easily purchased homes because of their income. For many years, the standard advice was to buy a home as soon as you could, regardless of your income.