Obtaining a home loan is a complicated process. It can be difficult, challenging the patience and perseverance of even the most eager prospective home buyer. There are, however, a few things that you can do to improve your chances of securing a great loan. Below are a set of tips to help you get the financing you really need.
Save Big
Lenders love to see a good savings history:
It proves that you are financially responsible enough to manage your premiums.
A large down payment from your savings will reduce the amount you need to finance and further incentivize a lender to work with you.
Your savings will provide a safety net if you come up short on income every once in a while, preventing you from having to miss payments.
Work Hard
A good job history goes a long way toward convincing a lender to finance a home. As with your savings, this is something you can work on long before you actually start shopping for real estate.
Manage Your Debt-to-Income Ratio
Your debt-to-income ratio is a measure of your monthly expenses against your monthly income. The lower this percentage, the more comfortable a lender will be because they know that you have the funds available every month to make your premium payments.
Check Your Credit Report
Of course, you’ll want to know your credit score before you approach lenders to know whether or not the rates you are being offered are fair. However, you’ll also want to take a hard look at the factors affecting your score. Make sure that everything is correct. Credit reporting agencies are comprised of people, and, as we know, people make mistakes. Often, these are simply the result of clerical errors or mistaken identity. If you find issues, work to resolve them in any way possible. Also, even if everything is completely accurate, you might find that the outstanding balance on a personal loan impacts your score and chooses to pay it down before submitting loan applications.
Apply Smart
Make sure that you vet your potential lenders carefully before applying. Sending out multiple applications at a time will show up on your credit report and negatively affect your chances of getting a great deal. Find lenders that seem the best options for your needs and apply to only a couple at a time until you find one you would like to work with.
Be Honest
In general, honesty is the best policy. It is especially important here, though. Specifically, you’ll want to make sure that you are open with lenders about all outstanding debts. If it is found out at some point that you were hiding some credit card debt or an old, unpaid loan, your lender will lose trust in you, and your home loan will be impacted, if not completely withdrawn.
If you are in the market for a home loan, you can’t afford to ignore the suggestions outlined above. Complete as many as possible, and your chances of getting great financing on a new home will be vastly improved. Your new house is just a bit of effort away!