Buying a house is one of the most exciting things you can do in life. It’s also likely the most expensive. And unless you have lots of cash, you’ll need to take out a loan to help finance the home purchase. Unfortunately, applying for a mortgage can be nerve-wracking, especially for first-time homebuyers. And waiting for the nod from your lender can be stressful when you’re trying to buy that perfect home. To help you with that, here are three ways to maximize your mortgage chances:
Check Your Credit Report
Before you start the mortgage application process, it’s wise to check your credit reports first. Your credit health plays a significant role in getting a good deal on a mortgage or even getting approved at all. Unfortunately, over 34% of homebuyers’ credit reports contain errors.
So, to boost your mortgage chances, pull your credit reports from annualcreditreport.com and ensure there are no errors that may be damaging your credit. For instance, review your personal information, credit accounts and loans listed, or mysterious accounts opened. If you find errors, you should dispute them with the bureau, which is required to investigate and respond back to you within 30 days.
Boost Your Credit Score
When it comes to the credit score required for a mortgage, many conventional lenders consider 620 to 640 to be the minimum. But some government-backed loans, such as VA and FHA, will allow you to borrow with a score as low as 500. However, note that the higher your credit score, the higher your chances of securing a mortgage (and at a lower interest rate).
To boost your credit score, consider the following:
- Make all your debt payments on time and in full
- Keep your credit utilization ratio below 30%
- Avoid significant purchases and opening new lines of credit before applying for a mortgage
Every lender is different in how they underwrite mortgage applications and how they assign interest rates. So, while one lender might reject your mortgage application, another may be more willing to finance your purchase.
Shop around and compare mortgage lenders; the more lenders you compare, the better your chances of finding a suitable lender to work with. Besides, you’ll boost your odds of getting the lowest mortgage rates available to you.
Essential Note: When shopping for a mortgage, look for programs that work for you – from down payment assistance programs and first-time homebuyer programs to government-backed mortgages.
Maximize Your Mortgage Chances and Buy Your Dream Home!
Securing a mortgage is an essential part of the homebuying process. So, be sure to take your time and evaluate your options to boost your mortgage chances. And once you have the loan approval, you’re on the home stretch!