Getting approved for a home loan and securing that mortgage is a huge milestone in life. In fact, it may be where all your dreams of the future lie. Don’t waste all of the time you spent perusing listings, using an emi calculator for home loan, and more. Instead, go in knowing what’s needed from you. Before you expect a lender to hand you what you need for your dream house, increase your chances of approval with these four tips.
- Show the lender you’re prepared.
You want to create a financial picture that ensures you’ll get the best home loan interest rate. Therefore, never arrive to a meeting with a lender empty-handed. Before you make that meeting, gather a number of helpful documents.
This includes a few years’ worth of tax returns, monthly bank statements, and some recent pay stubs. In addition to this, you’ll need to have on hand any materials that explain discrepancies, overages, and shortages in finances related to these documents.
- Do a little market research.
The truth is, the market can influence what kind of documentation the lender requires. The property you want may seem like an absolute steal to you, but the market may be telling the lender that it’s risky. This is particularly true if you’re buying property in a development that hasn’t been completed, in an area where such projects aren’t currently doing so well.
If this is the case for you, be prepared for that lender to dig deeper into the viability of the deal. In the end, they may be asking for a larger down payment.
- Attend to your credit and debt.
There’s not a single loan out there that you should take without first addressing your credit report. This is how you can reasonably estimate what you’ll qualify for in the first place. As always, once you have your reports in hand, the first thing you do is check for any errors and submit to have them corrected.
Now it’s time to raise your score by taking care of your debt. Your lender will only want to see a certain percentage of your actual income being eaten up by payments on any existing debt, as well as your new mortgage. So pay off what you can before applying.
- Stop spending.
Here’s an interesting tip that many people miss, and it can end up costing them. While getting a new house comes with plenty of expenses, hold off on other big purchases – like tons of brand new furniture or a car – shortly before and after getting that home loan.
The reason for this is that certain lenders can and will back out before everything is set in stone if they see you’re in big-spending, debt-collection mode. Ideally, their loan would be the only one you’ve planned to take on in recent months.
The wait to hear back about your loan can be nerve-racking, but there’s a good way around this. Create a portfolio of your finances that a lender can easily understand, be sure the property isn’t a risky prospect for lender, get rid of debt, and don’t take on any more. Approach the loan process with confidence, and lenders take notice.