As many loan seekers know, when it comes to getting a mortgage the devil is in the details. Poor education about mortgage options can prove to be futile when applying for a loan.
Oftentimes, borrowers are misled with news of dropping interest rates that they jump the gun, reaching out to lenders. This could result in their mortgage loan bid being turned down. This article will guide you through the details of checking for eligibility and the steps to take to avoid your bid from being thrown out the door.
How to Get Approval for a Mortgage
Know Your Credit Health Status
A loan application can be successful when you begin to think like the lender, so the first thing to consider when you apply for a mortgage is to know your credit score. Interestingly, your credit history report is the first thing lenders go for immediately they receive an application on their desk.
Through your credit history, they’ll be able to check if you have any outstanding debts or if there are any suspicions in your bills payment history. Tracking your credit history is important as it helps you to fix your credit score before lenders have access to it.
A change of address can hurt your credit score, too. For military families, this is a sad reality since they’re frequently on the move. So, besides regular tracking of your credit score, you can seek financial assistance from mortgage companies. If you were relocating to or within Canada, you can reach out to reliable relocation mortgage companies around Ottawa for expert advice on consolidating your debt.
Determine How Much House You Can Afford
Oftentimes, you may be tempted to get a mortgage loan, which you may not be able to service properly. This situation arises simply because you may have overlooked other factors that go into choosing the type of mortgage payment you can afford. Factoring in insurance expenses, taxes and groceries is important in choosing your mortgage budget.
Generally, lenders are wary of borrowers who have monthly payments that exceed 28% to 44% of their monthly income. You may waive this rule if you have an excellent credit score, but it’s best to know how much you are ready to pay and to stick to your mortgage budget.
Decide Down Payment Options
Calculating a down payment will help you determine how much you can save from your income and the best way to save for it. A down payment is that lump sum of money (in percentage) you commit towards purchasing your new home, and lenders expect that you’re able to make a down payment of 10% to get your loan bid approved.
Finally, save enough money before you walk into the lender’s office. Lenders are very cautious of lending out money to borrowers with zero credit, so it’s important your credit cards look good without the red flag.
