Well, when you have finally found your dream house and wants to own it for yourself, you will be waiting with your fingers crossed to get an approval for the mortgage. After hunting down for the best in the housing market and making so many efforts, refusal is something that won’t go down well with anyone but there must be something you can do on your part that assures you an approved mortgage.
To begin with, you need to make sure that you follow these steps properly before you apply for a mortgage and be certain that this will help in getting your loan approved.
1. Get to know about your bank:-
Every bank has different mortgage options and they deal with every customer differently so before you apply, find out which bank suits your needs and fulfill your requirements in approving your loan. You need to sit and discuss with them all the criteriums that are important for the sanction of home loan and remember that not all banks are willing to lend you money but few will match your choice and like to borrow the amount.
2. Your credit rating:-
Your credit rating is very important as this is the first thing bank looks for to know how financially sound you are. Any bank will only lend you money based on your credit rating and how well it is. They need to know how good you are with your credit cards, overdrafts, bills and utility bills. Even if you don’t have any credit then this will also become a reason for their refusal because your credit report shows how trustworthy you are in returning the amount on time and with no credit, there is no guarantee.
3. Your employment:-
The factor that actually assists lenders in lending money out to you is the amount of time you are employed in one company, stayed at one address and continued with a job leaves a positive impact on the banks. A steady income will always encourage the lenders to lend money easily.
4. Your savings:-
Try to save up even before you plan to own a home and try to pay at least more than 20 percent down-payment of the homes actual price which will lead you to borrow less amount from the bank, which it will do willingly and then it will also be easier to pay it off. You can even ask your friend or relative to help you in your down-payment.
5. Try to wrap all other debts:-
Try to pay -off your credit cards, outstanding loans, bills etc beforehand and try your best not to indulge in any other credit options for another 6 months before applying for a mortgage. Clearing off your debts grants you a better option in getting loans secured for your house.
6. Invest in right kind of property:-
At times we are interested in buying an unusual property for ourselves but banks are not ready to lend money for such property as they prefer to only lend out for certain kind of flats or houses as they have criteria, so talking to your bank before you finalize on a house is very important.
You can even get a pre-approval from the bank to get an idea how much money they are willing to lend and on what kind of property as it protects you from hassles later on. Getting a pre-approval doesn’t guarantee an approval but at least you will get a clear picture of what you need to look for in purchasing a house for yourself.
7. Correct errors:-
You need to correct the mistakes in your credit file before applying for the first time and in case you are rejected, you need to get hold of yourself, check for the errors again and after few months re-apply because if you rush to another lender then you are sure to face rejection again and again.
You need to understand something is messed up in your credit report and needs correction as soon as possible. Running from lender to lender will not help you in any positive way, but in fact, it will damage your credit report further so in case you are rejected, take a deep breath and take a peek in your credit score for assessment.
In case, you feel that there is nothing wrong with your credit report then you can question your lender, and he will provide you with it and let you know what you are missing.