Maximizing Mortgage Approval: Understanding What It Takes
If you’re looking to be considered and approved for a home mortgage, there are a few must know how’s and principals to keep in mind to maximize your chances. While there are of course the more seemingly obvious variables, such as your credit report, deposit and percentage put down, or income, it’s important you fully understand these dynamics and the mechanics that power them when a bank or lender considers your mortgage loan request.
Let’s look at some of the most common determining variables of not only getting approved for a home mortgage but steps and things to keep in mind when doing so to prevent getting turned down.
First, while your current credit report is significant, it’s important that you understand how it works, and discover in advance where you currently stand and why. Therefore, once you research your current credit report, pay especially close attention to any possible errors or discrepancies, and report these to the appropriate reporting agency and submit an appeal if necessary to have this removed before you fill out and apply for a home mortgage loan with your loan consultant.
Have you been married in the past, and if so, have you had any joint accounts or other financial ties with someone that may have gone south and otherwise left a negative mark on your report, If so, this is something you need to address through an appeals process with the respective credit reporting bureaus? Most importantly, understand your credit options, and not only pay off any current debt, but also take extra steps to ensure you always pay your credit card, rent, and any other debts on time. Not doing so at least 6-12 months in advance of applying for a home mortgage, depending on the circumstances can get you immediately denied, or at a minimum a higher interest rate or larger deposit down.
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Also, when it comes to credit cards and balances, pay special attention to your current limits, how much of it you’ve used, and make it a point to not max these out. If you have in the past this could be a problem, and don’t feel obligated to be approved for or collect credit cards or get the highest possible line of credit. Doing this, much like attempting to pay one off with another can cause serious issues, and lenders have access to and pick up on these types of things.
Are you registered to vote? While this may seem like a bizarre or irrelevant factor it’s not. In fact, most if not all banks will not even consider an application if you’re not registered to vote. That is, as banks and lenders use your voting registration information to ensure you are who you say you are, reside where you say you do, and review for any other unusual circumstances or discrepancies that may make them consider you a flight risk for failing to pay in the future.
One of the last, but by no means least important variables to consider is repeatedly applying for mortgage loans, credit cards, or other loans as these can leave you with a negative or otherwise undesirable stigma which will cause most banks to not even want to touch your application. It is ideal to wait at least 6-12 months before applying for a mortgage to have a clear record and no recent credit-check requests or loan applications. While on the topic of loans, it’s ideal to avoid payday loans like the plague, as they’ll be just that when it comes time to apply for and be considered for a substantially sized loan like a home mortgage.
Finally, when it comes to preparing for and applying for a home mortgage consider how valuable and effective thorough preparation can be for you. Not only researching your own history, but also considering any advantages and disadvantages of yourself as an applicant. Put yourself in the shoes of a bank or lender and try to find ways to improve your overall appeal or desirability to lenders. Some of the most important and valuable items to prepare before applying for a home mortgage loan are proof of income, more than one form of identification (ideally a driver’s license and passport if possible), proof of recent bank deposits, the previous 3 years IRS tax returns, proof of any bonuses or commission from your employer, and a proof of address. It is the job of the bank, loan officer or lender to ensure you are who you say you are, make the money that you do, have a desirable credit history, background, and have the available funds and financial history that you claim to responsible apply for and take on the burden of a home mortgage.