How to Get Approved for a Home Mortgage Loan
It’s easy and fun to go house hunting, but when it comes time to finally go all in and apply for that home mortgage loan, the thrill is gone and the worrying begins. The reason is the housing market is improving, but getting approved for a mortgage is still a challenge for most people.
The good thing is, there are some things you can do to help improve your situation so you get the loan you need. Here are six tips fromTrinity Custom Homes that will help you get approved for a home mortgage loan.
#1: Know Your Credit Rating
Before you start looking at houses, you need to know where you stand with the credit bureaus. You’re allowed one free credit report from each of the three credit bureaus every year, so now is the time to take advantage of it. Grab a copy of your credit report and scour it for any mistakes. Look for signs of identity theft. Is there anything on your report that shouldn’t be there? If so, dispute it so it can be removed. The cleaner your credit report and the higher your credit score are, the better the chances of you getting the home mortgage loan you want.
#2: Save Money
Before the housing crisis, a home could by purchased with no money down. But, today’s lenders are more cautious and almost all will want a percentage of the home’s price put down up front. Depending on the lender you go with, the amount can be anywhere from 3.5% to 20% or more. Therefore, the more money you have saved to put down on your home, the better your odds will be of getting your application approved.
#3: Avoid Taking on New Debt and Pay Down Existing Debt
Lenders aren’t keen about lending to borrowers who take on new debt at a time when they’re applying for a mortgage. Ideally, you want to pay down your current debt, not take more credit on. This is especially important if you’re pre-qualified for a mortgage. Being pre-qualified is not a guarantee that the loan is yours. Should anything change in your credit report between the time you got pre-qualified and the closing, you could find yourself denied the mortgage.
#4: Don’t Change Jobs
If you’re thinking about changing jobs, wait until you close on your home to do so. The bank is approving your loan based on your work history and stability. If something changes with your work situation, barring a promotion at your current job, the bank will almost always deny the loan.
#5: Get Pre-Approved
Before you go house hunting and find a home you love, make sure you can qualify for it by getting pre-approved for a home mortgage from your bank or lender. This will provide you with a baseline for what the bank will approve you for and this will help keep your home search to those properties more within your range.
#6: Know How Much Home You Can Really Afford
Remember, when you get pre-approved, the amount you’re pre-approved for is not always what you can afford. You may be pre-approved for $250,000 but your personal budget may say you can only afford an $180,000 loan. Go over your household debt and income and find out how much you can realistically afford to spend for a down payment and for a monthly mortgage payment. These are the numbers that should guide your home buying needs.
Contact Trinity Custom Homes for the Home of Your Dreams
Call Trinity Custom Homes today at 888-818-0278 to schedule a consultation with one of our experienced custom home builders. For more than 10 years, we have been building custom homes throughout five southeastern states – Georgia, North Carolina, South Carolina, Tennessee, and Alabama – so no matter where you’re located, we’ll be able to help you. When you’re ready to get started, give us a call and let us show you what we can do.