Purchasing a home is one of the most important financial decisions you can make in a lifetime. You may not have the amount of money at hand needed to pay for a house in full, but you can always get a home loan to help you finance the purchase. What can you do to get approved of your loan?
Mortgage or Home Loans are a type of financing that allows you to pay for a house and other investment properties. One only needs to apply for it, get approved, pay for 20% down payment, and your mortgage lender will pay for the rest. The borrower pays the loan off with interest every month for 30 years.
If you want to improve your chances of being approved for mortgage loans Houston, here are some things you need to keep in mind.
Build Up Your Credit Score
Your credit score matters as it is what lenders use to measure your ability to pay off credits. With a high credit score, you get better chances of getting approved and better the favorable terms and lower rates you can get. So, aim for at least 680 before applying. You can check your credit score by pulling your credit review. Make sure to pay off bills on time, pay in full as much as possible to help improve your score and check for any errors and have them corrected asap.
Buy Within Your Means
It is critical for aspiring homeowners only to buy a home you can actually afford. Most lenders allow 41% of your DTI or Debt To Income but don’t get too excited in grabbing that maximum amount. Stretching yourself too thin can lead to your failure to pay up on time if ever an emergency comes barging at your door.
Save Up At Least 20% Down Payment
You can avoid PMI (Private Mortgage Insurance) if you can pay for the 20% down payment. PMI is a kind of mortgage insurance paid and required when financing with conventional loans and paying a lesser amount than the usual 20% down payment. This actually protects the lender, not the borrower if you ever stop paying your mortgage.
Maintain a Stable Cash Flow
If there is another thing that can get you denied for a mortgage loan, it would be showing them that you’re financially unstable. Make sure you generate a stable and a high cash flow by sticking to your employer, paying off debts on time, avoiding a new one and not going on a huge shopping spree before you managed to secure the loan.
Prepare the Necessary Documents Early
Before applying for the loan, make sure all your IDs and the details on it are up to date. Compile all financial documents like proof of income, collateral documents and other evidence of your earning if you’re self-employed.
Lastly, Keep Your Communication Lines Open
Responding on time will get you the lender’s approval, so make sure to keep your lines open. Don’t cause delays by failing to respond to their inquiries and request promptly. You wouldn’t want to miss the chance of owning a home, and even your deposit just because it took you long to answer their calls.