Owning a home of your own is a goal that many individuals have set out for themselves, the process of achieving this goal isn’t always simple. First, the decision needs to be made that it is time to jump into homeownership, then you need to find your ideal home, make an offer on the home that gets accepted, and finally qualify for a mortgage. The process can be as overwhelming as it sounds at times, but if you are well prepared the process will go a lot smoother.
If you are a first-time home buyer looking to realize your goal of homeownership, we can’t help you find the perfect home but we can help you qualify for a mortgage by utilizing the tips below.
1. Assess Your Credit Score
Your credit score is not the only factor that is used by mortgage lenders when assessing an application, but it is an important factor. Knowing your personal credit score prior to applying for a mortgage will give you an early indication if your application will be approved. The minimum credit score usually considered for mortgage approval is 660, but that doesn’t mean you are automatically approved with a higher score or declined with a lower score.
2. Prepare for a Down Payment
Having a significant down payment for the purchase of your home is a positive in the eyes of the lender, this shows that you have prepared for the purchase and have some personal equity involved in the purchase. It is unrealistic to approach a mortgage lender without having a meaningful down payment. In addition to your credit score, your down payment size also plays an essential role in getting you approved. Having a down payment of around 20% of the property value will greatly assist in your mortgage approval.
3.Your Income Matters
It is extremely important to provide evidence of a steady flow of income to repay the mortgage. Lenders will likely not be willing to approve an application by an individual that does not have the annual income to sustain the property being purchased. Avoid changes in your career prior to your mortgage application, if you are thinking or changing companies or starting your own business, hold off until you have possession of your home. Lenders do not like uncertainty in employment.
4. Pay Off All Existing Debts
Another way to get approved for a mortgage fast is by paying off your existing debts. When you
are debt-free, it will boost your chances of getting quick approval. A lender may refuse your application if you have too much debt as they may feel that you do not have the capacity to make all of your payments on time. Keeping a nil debt profile will affect how much you can borrow, as it also affects your credit score. More debt means lower chances of getting approved.
5. Get Pre-approved
Contact your mortgage lender for financial evaluation and pre-approval. The process considers your financial status, and it is valid for 90 to 120 days. The assessment of your financial situation and a pre-approval will help expedite your search for the perfect home as you can focus on properties that are within your pre-approved price range. This will also help you move quickly on making an offer on a home you like, as you know you will be approved for the mortgage.