If you are thinking about buying a home this year and aren’t sure if you will qualify for a mortgage, there are several actions you can take to improve your chances of being approved for the amount you wish to borrow.
Did you know that lenders look at more than just your credit rating? They want to know that you have a steady income and are responsible with your money.
So before you start home shopping, take some time to make sure you are financially stable.
#1. Stay at your current job. Lenders will want to see, at a minimum, your last two tax returns. If you want to buy a home this year, this is not the time to do a career switch and start over in a new industry. If you are just getting started in the professional world, you may need to work a little while longer in order to show a history of steady income. Stability is key!
#2. Put off buying a new car. Be careful about buying big-ticket items like a new car or boat or on credit until after you have closed on your home. The nice to haves will need to wait for now.
#3. Pay down credit debt. If you are carrying a balance on credit cards, work hard to pay those down or off. Try not to use credit cards if you can’t pay the balance off monthly. This rule should be followed at all times.
#4. Pay your bills on time. Incurring late payments will reflect poorly on your credit report, so keep track of deadlines or set up automatic payments before they are due. Stay on top of these!
#5. Save up cash for a down payment. You have a better chance of being approved for a lower amount, so try to save up for a down payment to reduce the loan amount. Put together a monthly budget and allocate a portion of your monthly income to savings and be disciplined about it.
#6. Say no to cosigning for others. Now is not the time to cosign on any loans with family members or friends. Do not take on more debt!
#7. Throw those credit card offers away. Each time you apply for credit, the provider will pull your credit history, which affects your score. Don’t fall for the exciting sign up bonuses – they will cost you at the end.
Hope you found these tips helpful. Are you on track for getting approved?
