It has been said that a successful home loan approval process requires 1 percent perspiration and 99 percent preparation. These loans can be used to maintain or increase the value of your home. This can include general repairs, a new kitchen, a new bathroom, landscaping improvements, or even a swimming pool. Increasing the value of the property can increase the expected sale value of the house. Here are 6 secrets that will help you avoid problems when trying to get mortgage approved.
early start
If you plan to buy a home in August or September, give yourself six to seven months to complete the loan process beginning in January.
Do your loan homework
Know up front what type of home loan you are applying for and what costs you will incur over the course of the application. Currently, fixed-rate mortgages are said to be the best option because they lock in one loan interest rate and your loan payments will not change over the course of a loan (usually 30 years, although 15-year loans, with payments higher monthly payments, and lower total debt, are also an option).
Check your credit
Few things are more important to banks and lenders than your credit score. Keep your credit score in check by avoiding large credit care purchases before and while participating in a mortgage application process. Banks and other lenders will consider a poor credit score to be a determining factor when granting mortgage loans. Taking on more debt could change your credit score, resulting in a potentially higher interest rate. Also, don’t mess with your credit until closing day, such as when making a large purchase.
Prequalify
Getting prequalified will put you a step or two ahead of the game for your home loan. This will give you a better idea of how much home you can afford and an advantage in getting approved for a loan. Your potential lender will ask about your income, assets, and credit. Just don’t confuse prequalified with preapproved. The latter means you actually have a loan available, while being prequalified means you’re in the game but haven’t gotten a loan yet.
Organize your documents
Getting your documents in order early is vital. Learn how to obtain your purchase and sale agreement (copies accepted) and other “high priority” mortgage information, such as estimated monthly information, estimated monthly payments, tax documents, pay stubs, and bank and investment statements. Be prepared to list previous residences, going back seven years. Any debt, such as credit card, car, student loans. Banks will look at outstanding balances and won’t like it if you have more than 10 percent of your projected loan amount tied up in debt.
Be honest
Don’t overstate income or investment assets. Also, don’t underreport debts. Lenders will quickly find out and reject loan applications that are not true.
