Here’s How You Can Maximize The Chances Of Your Mortgage Loan Application Being Approved!
When you’re counting on the bank to help you out with buying a home, all you’re wishing and hoping for is for that confirmation that they’ll take on your mortgage – but it is very easy for them to decline. The good news is that there are some ways that you can boost your chances of the bank approving your mortgage loan application.
A home loan can be a confusing and complicated process if you don’t know it well, but with a little preparation, the process becomes simple. Let’s get to know more about the home loan process and learn the ways we can boost those chances!
Your Credit Score
If you have applied for a home loan and you haven’t had a look at your credit score, you’re just shooting in the dark and hoping you’re aiming for the target. This is the most important factor that the banks consider when considering your application for a home loan. Your credit score is basically a rating of your financial history, it is a number that reflects how well you have dealt with your debt, and whether you have defaulted on payments. Your credit record is a complete record of all your financial accountabilities and reflects your commitment to paying up your debt. Fortunately, these reports are pulled together by many systems and they are easy to obtain for free, online. Options are available to actually monitor your credit score and report and to be alerted whenever changes are made. This is usually a paid facility. Also, you will be able to see which companies viewed your credit status.
Scout For Errors
Take a close look at your credit report and review every detail in the search of any errors. Errors on your credit report that are left unresolved may make you look bad, and once the bank where you have placed your home loan application takes a look at your credit report and sees anything out of order, you are likely to be declined. Avoid having to go through the entire home loan process again by checking out your credit report yourself and making sure everything is in the clear. It was actually studied and findings showed that 1 in 5 people had errors on their credit report – this is an eye-opener! The consequences may be bigger than you even realize! Dispute any inaccuracies with the major credit bureaus and they will investigate the issue and correct it if there are errors found.
Improve Your Credit Rating
If you pull your credit record and made sure it was error-free, the next thing you can do to help you score your home loan is to try to improve your credit rating. A few points could make all the difference when it comes to qualifying for your home loan and may even affect the interest rate you obtain. Yes – that’s right, getting the best interest rates for your home loan can depend on your credit score. Maximize your score before you have the lender looking at it, to help improve your chances of being lent the money to purchase a home. You can go about improving your score by paying off as much debt as you can, starting off with any credit card debt. Your credit utilization ratio is calculated by dividing your credit limit by your card balance. Your credit rating increases when you have lower balances on your credit cards and other debt. If you cannot close off your credit cards, a good guideline is to keep the balances below 20% of their max credit limit.
Prepare In Advance
Once you make up your mind that you are searching for a home, the first thing you need to do is make sure that your payment history is in order. Make sure you don’t miss any payments and also make sure that you don’t make any payments late. Help yourself to keep up with your installments for debt by setting up the payment all for the same date, so you know that everything must be sorted out at once. Also, set up automatic debit orders to make payments so you don’t need to plan them yourself. Make sure to keep an eye on the debits to make sure they really did come off your account. This is to help your payment history look better and help reflect potential lenders that you are a reliable payer. Also, if you know you are looking to borrow money in the near future to buy a home, do not apply for more credit for anything else. Do not open any new credit either, even if it has been approved.
There you have it – a few things that you can do to learn more about your home loan and to up your chances of approval. All the best in your hunt for a home loan!
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