Very few people can afford to purchase their first home without the aid of a good mortgage loan. So, if you have your heart set on becoming a homeowner, you should start taking steps to increase your odds of loan approval. While getting approved for your ideal loan may present a number of challenges, obtaining a mortgage may not involve quite as many hurdles as you think. Soon-to-be homeowners looking to help their chances of loan approval are urged to consider the following measures.
Improve Your Credit Score
Applying for a mortgage loan while contending with a mountain of credit card debt is unlikely to work out in your favor. So, if you're currently dealing with a sizable amount of credit card debt and have a credit score that leaves much to be desired, make sure to get a handle on this situation before proceeding to submit any mortgage applications. Additionally, once you're free of credit card debt, give your credit score a bit of time to recover before you start submitting applications. While this will likely require you to hold off on homeownership for a bit longer, your patience is likely to be rewarded if you're able to stick it out. Keep in mind that most lenders take applicants' monthly debt-to-income ratio into careful consideration, so the less debt you have, the better off you'll be.
Abstain from Making Large Purchases on Credit
One of the worst things you can do during the loan application process is add to your credit card debt. For this reason, it's recommended that you abstain from making large purchases on credit once the process is underway - outside of emergency situations, of course. If you absolutely must make a large purchase during this period, do so via cash, check or debit. Additionally, if you don't have sufficient capital on hand, consider asking a family member, friend or close acquaintance for a short-term loan.
Stick with Loans You Can Comfortably Afford to Repay
There are numerous reasons you should only apply for mortgage loans that you can comfortably afford to repay. To start with, you're far more likely to be approved for a loan that falls within your respective economic means than one that's well outside of what you can reasonably afford. Secondly, even if you're approved for a loan that you'll struggle to repay, your quality of life is liable to be severely diminished. After all, what's the point of living in your dream home if every penny you make is going to be put towards paying it off?
There's also the issue of property taxes and maintenance expenses. Even if you're able to weather the financial strain of enormous monthly mortgage payments, you may have nothing left over to put toward maintaining the property. Furthermore, should you experience a reduction in income or lose your job, you may fall hopelessly behind with mortgage payments and wind up being foreclosed on. Sunshine State-based house-hunters seeking out affordable houses in a lovely area would do well to check out Daytona Beach homes for sale.
Be Willing to Make a Large Down Payment
When it comes to down payments, many mortgage applicants are naturally inclined to put forth as little capital as possible. After all, a fair number of us have been conditioned to spend as little money as we can at any given time. However, this level of frugality is not going to serve you well when applying for a mortgage loan.
For one thing, the less you put down, the more your monthly payments are likely to be. As such, making a large down payment may ultimately enable you to pay off a loan faster. Secondly, a willingness to make a sizable down payment will show lenders how serious you are about taking on the responsibilities of homeownership and loan repayment.
Increasing the odds of mortgage loan approval should be among the top priorities of every soon-to-be homeowner. In many cases, loan approval is the only thing standing between first-time homeowners and their dreamhouses, so if you haven't put much effort into bolstering your chances, now would be time to get on top of this. Fortunately, increasing the likelihood of loan approval isn't as daunting as some first-time buyers make it look - especially if you're working with the helpful pointers outlined above.