5 Tips to Improve your Chances of Getting Approved for a Mortgage

Before the real estate market collapsed a few years ago, homebuyers didn’t have to go through the eye of a needle to obtain mortgages. Gone were the days when getting a mortgage was as easy as buying a movie ticket at your favorite cinema. Today, before getting a home loan, lenders have to dig all documents that can prove your financial suitability and before you know it, you will be rudely awakened by your loan officer denying your application.

So how do you avoid being one of the many who were denied?

Improve your credit score – Most lenders require a credit score of over 700. If you have a bad credit, there are things you can do to improve it like paying off your debt, keeping up with the payment and never be late, avoid new credit card purchases, avoiding new credit card application or getting professional help.

Think twice before going self-employed– It’s good to be your own boss however there are some disadvantages when it comes to applying for home loan. Lenders require at least two years of tax returns to judge your income. Many self-employed individuals report expenses on their taxes in order to reduce their tax liability. For tax purposes, it may be beneficial, but the net income is the number used for income qualification. It will be hard for you to qualify for a loan if your net income is low.

Save money for your down payment – Nowadays, lenders are asking buyers to put a substantial down payment in relation to the amount of the loan. It doesn’t need to be 20% of the home’s value, there are loan that only needs 3.5% to 5% if you qualify.

Have a good employment history – A borrower with at least two-year employment history in the same field of work doesn’t look risky to lenders compared to a borrower who has switched to three different jobs in the same year.

Your debt to income ratio is 40% or less – If your monthly debt payments make up 40% or less of your gross monthly income, lenders can write you a mortgage. Higher than that, it is less likely that you can qualify for a loan.

Are you a first time buyer? Looking to downsize or relocate in Greenville? We advise you talk to realtor before you start looking at homes. Please do not hesitate to contact us – no obligation! We can do an online consultation if you can’t make it in person. We’re happy to serve you!