Buying a home is one of the most critical processes of your life. Unless you are one of the lucky people to have a large amount of money lying around, chances are you’ll need to rely on being financed in order to pay for a home.
If you’ve never applied for a loan before it can be a stressful process. However, there are a few tips which will help you improve your odds for being approved, and move closer to buying the home of your dreams.
To ensure that you are ready to make an offer on a home, you should greatly consider getting preapproved as early as possible. Having a pre-approval under your belt will ensure that you can move fast when you find the home that you want to buy. Usually, an agent will ask you to be preapproved before working with you. Therefore it’s in your best interest to get pre-qualified before hiring an agent. That way, you will demonstrate that you’re serious about buying.
Statistics show that homebuyers who are working with a buying agent are much more likely to obtain a loan pre-approval than buyers who don’t work with an agent.
Have a Favorable Credit Score
The most important thing that lenders look for is your credit score. Your credit score will determine how good of a rate you’ll get. Therefore if you’re looking to pay as little interest as possible, you should consider getting your credit score up before applying for a home loan.
If you have any late payments or derogatory remarks you should take care of them as soon as possible. Lenders like to see that you’re good for paying people back and are a reliable spender.
Show That Your Finances Stable
When you apply for a loan, the lender is it going to be looking at whether you are capable of paying the mortgage back. Therefore, by demonstrating that your finances are stable, you can significantly increase your chances of being approved.
One of the most effective ways to show that you’re capable of paying a loan back is by limiting your large purchases leading up to your loan application. A long line of big purchases recently made will stand out like a red flag to lenders. You should also make sure that you never missed any payments or pay late.
Lastly, lenders may be concerned if you change jobs during your application process. They may feel that your salary will be lower as a result.
Offer a Bigger Downpayment
The bigger of a down payment that you can offer, the greater your odds of being improved will increase. A bigger down payment will show lenders that you’re not only a serious buyer, but that you have the funds to prove that.