Get qualified: 4 ways to increase your mortgage approval chances
It’s safe to say that buying a home is one of the biggest financial decisions people make in their lives. Many different factors are taken into account, such as where you’ll live, the home itself, price point and how to properly manage expenses in tandem with monthly mortgage payments.
Given the significance of purchasing real estate of any kind, it’s no wonder prospective buyers in the market for the first time approach the mortgage process with some apprehension, worried that they’ll be turned down.
The good news, though, is so long as they prepare before applying for a mortgage, there’s little to be nervous about. Here are four considerations that can help ensure you’re really ready, thereby increasing your chances of approval from a loan officer:
1. Factor in costs you didn’t have as a renter
As an apartment dweller or house renter, you’re familiar with monthly payment due dates for expenses like rent and certain utilities. But as a homeowner, some of the costs that might have previously been included in your rent – like water use – aren’t covered in a monthly mortgage payment. Additionally, when the toilet was clogged or the refrigerator broke, all you had to do was let the landlord know to schedule a fix. When you own your own home, the cost of maintenance is your responsibility, whether you handle it yourself or hire a professional.
Jotting down the additional expenses that can come with homeownership allows you to better assess your readiness, and will also help you answer questions you will be presented with during the application process.
2. Objectively analyze what you can afford to spend
The National Association of Realtors comes out with reports every month that detail what the typical home costs in the U.S. The numbers vary depending on the part of the country. Similarly, try to come up with a price range of your own that will help determine how much money you can pay and still be comfortable. Once you actually begin the mortgage process, seek prequalification or preapproval, you’ll get a more definitive figure. You can start by using mortgage calculators. Simply plug in the pertinent data to get your answer. Just keep in mind that the answer you get is an estimate. You may want to take a look at local listings for real data, to see what sellers are asking.
3. Check your credit report
As a consumer, you’re entitled to a free credit report each year from all three of the credit bureaus, TransUnion, Equifax and Experian. Your credit score gives lenders an idea of your financial situation and whether or not you consistently make payments on time. The higher your score, the less you’ll wind up paying in interest charges. If your score is below 650, you can bulk it up by reducing your debt, consistently paying off bills before they’re due and getting rid of credit cards you don’t use, advised FICO. Plus, a good credit score tells lenders you’re a good mortgage candidate.
4. Avoid ‘job hopping’
Everyone wants to improve their financial situation, which sometimes involves leaving one position for a new one. But if you’re thinking about applying for a mortgage, stay with your current employer. Job security is an important component of mortgage approval and helps the lender assess your dependability. Not to mention you can continue to save, without risking any sort of lull between jobs.
There’s nothing to fret about when you’re prepared, and with Kentucky Bank, we can help you reach readiness. Contact us to learn more.
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