Unless you’re planning on paying in cash, buying a new home requires one to first secure mortgage financing. Here are a few ways you can increase your chances of qualifying for a mortgage:
Review Your Credit Score
When it comes down to it, your credit score is the most important factor in getting qualified for a mortgage. Most lenders require applicants to have a minimum credit score of at least 620. The higher your credit score, the better the mortgage rate. Lenders use that information to judge financial reliability and stability – taking into account things like:
If your score is lower than you hoped, there are a number of things you can do to get back on track. We recommend consulting with one of our expert loan officers to come up with a strategic plan for optimizing your score.
Keep Your Budget Top of Mind
Before home shopping, make sure you sit down with a lender to go over your finances and get pre-approved. A letter of pre-approval not only validates your ability to get approved for a loan when it comes time to submit a formal application, it will help you determine how much you can reasonably afford, which will save you time when house hunting.
Reduce Your Debt-to-Income Ratio
Demonstrating a history of responsible credit is crucial for lenders, and shows you’re financially stable. Therefore, any outstanding debts you may have should be paid off – or systematically reduced – before beginning the lending process. In the meantime, it’s important to refrain from increasing your debt by opening new lines of credit, or taking out loans to finance other big purchases.
Don’t Change Jobs
If you’re looking to move out of your current job – no matter the position – during the home buying process, wait until after you have officially closed, or ensure it’s in the same industry you’re currently working in. When applying for a mortgage, you will be required to show at least two years of concurrent employment in the same industry in order to verify a stable source of income.