Mortgage approval requires only two elements to happen: prior preparation and clear communication with your mortgage lender. When you prepare months before you even apply and when you choose the right lender, you can easily get your home loan application approved.
Tennessee’s largest independent residential mortgage provider, Mortgage Investors Group adds that you also need to produce the required documents, from credit history to employment information. Other than completing your paperwork, you should also practice the following:
Manage Your Credit Score
Before considering your options for lenders, you need to find out about your credit score. Knowledge of your credit score will tell you what you need to do next. You could move forward with a loan application or wait a certain period to improve your score. You can pay any outstanding debts, especially credit card debt, to bring up your credit score.
A low credit score will tell your potential lender that you’re a risky borrower. The best credit score will depend on the type of loan you’re getting; FHA loans typically have the lowest score requirement of 500 at minimum and conventional loans require 620 at minimum.
Limit Your Spending
During your application process, the spending, particularly credit card spending, will play a big role toward your mortgage approval. So you need to practice care with purchases. If you don’t need new items, delay making any large purchases. You can also refrain from getting new credit cards.
Know How Much You Can Borrow
Aside from your credit, you also have to know how much mortgage you can borrow. Lenders look favorably on those who research beforehand and understand the enormity of a mortgage loan. You can use online mortgage calculators to determine the amount of money you can afford to borrow.
Make the Down Payment
The amount of down payment depends on the type of loan you’re getting, your credit history, and the type and price of property you’re eyeing. In general, though, lenders will require additional fees from you if you pay less than 20% in down payment. Ideally, you want to pay more in down payment to avoid paying fees on top of your mortgage insurance premiums.
You will have to do several other preparatory tasks to ensure that your mortgage will easily be approved. As long as you put in the time and effort to accomplish these tasks, your mortgage application process will be smooth and quick. And you can enjoy your new home as soon as possible.