Buying your dream home starts with applying for mortgage. Mortgage loan, for the uninitiated, is a home loan, where the property serves as the collateral. In case you are unable to repay the loan, the bank will have the right to take over your home, through the process of foreclosure. Sadly, many people don’t fully realize the terms and conditions of mortgage loans. If you are trying to improve your chance of approval, here are some quick tips!
- Start with your credit score. Most mortgage lenders are interested in knowing the credit score of the applicant, and there are ways to improve the same. Firstly, check if there are any possible mistakes or issues with your credit report and get the same corrected. Also, repay some of the debts that have been pending, because it will improve your score almost immediately.
- Know what you can afford. You cannot aim for a big $40,00,000 home when your salary doesn’t permit you. The installments for the mortgage shouldn’t be more than 28% of your gross income. Even an extra $500 every month can make things tougher.
- Be prepared with the savings. Buying a home is no easy task. In the initial, more part of the installments will go towards the interest. Apart from interest and principle, you also need to pay the taxes as applicable and for private mortgage insurance in some cases. Consider what you can save, spend before taking a call.
- Avoid big spending. Lenders would want to know about a few big deposits and withdrawals in your account, but with that, you should consider applying for other loans and credit cards, at least for a while. Make sure that you spend in limits and only what is required.
Check online now to find the best mortgage lenders.