Each day lots of people apply for a home mortgage only to find themselves getting turned down. Why is that the case? What did these people do that caused their application to get denied? If you are wondering what it takes to get approved for a home mortgage, keep reading to get educated so you aren’t someone who gets denied.
If you want to accurately estimate your potential monthly mortgage payment, consider loan pre-approval. Do your shopping to see what rates you can get. Once you know this number, you can determine possible monthly mortgage payments quite easily.
Refrain from spending excessively while you wait for your pre-approved mortgage to close. Lenders often recheck credit a few days before a mortgage is finalized, and may change their minds if they see too much activity. Wait until after the mortgage is a sure thing to make any major purchases.
Gather your documents before making application for a home loan. These documents are going to be what lenders want when you’re trying to get your mortgage. They include bank statements, W2s, latest two pay stubs and income tax returns. If these documents are ready, your process will be smoother and faster.
If you’re denied the loan, don’t despair. Rather, move onward to another lender. Every lender has their own criteria you need to meet to qualify for their loan. This is why it’s always a good idea to apply with a bunch of different lenders to get what you wanted.
Make sure you know how much you can afford before applying for a mortgage. Do not rely on what your lender says you can afford. Make a budget, allowing room for any unexpected expenses. Use online calculators which can help you estimate how much mortgage you can afford to pay monthly.
You may wish to refinance without closing costs. You do not always need to spend your money to save money when you refinance. Many lenders will offer mortgages that have no closing costs. Lenders make up for these costs by charging you an interest rate that’s slightly higher. This slight increase sometimes translates into some extra dollars in your monthly payment, but you can save thousands in your closing costs.
Try going with a short-term loan. Since interest rates have been around rock bottom lately, short-term loans tend to be more affordable for many borrowers. Anyone with a 30-year mortgage that has a 6% interest rate or higher could possibly refinance into a 15-year or 20-year loan while still keeping their the monthly payments near around what they’re already paying. This is an option to consider even if you have slightly higher monthly payments. It can help you pay off the mortgage quicker.
If you’ve gotten approved for a mortgage, don’t make any other big purchases until after you’ve closed on your home. Typically your lender will pull your credit once again right before closing. If there are issues that crop up it could lead to problems with your closing. Be smart and curb spending until all is complete.
If your appraisal isn’t enough, try again. If the one your lender receives is not enough to back your mortgage loan, and you think they’re mistaken, you can try another lender. You cannot order another appraisal or pick the appraiser the lender uses, however, you may dispute the first one or go to a different lender. While the appraisal value of the home shouldn’t vary drastically too much between different appraisers, it can. If you think the first appraiser is incorrect, try another lender with, hopefully, a better appraiser.
People go in search of their dream home every day, unfortunately it end when they get denied when trying for a mortgage. You don’t have to be that person, now that you read excellent tips on how to get approved for a home mortgage. These simple tips should be followed so the next time you apply, there is no reason that the lender will reject your application.