What do you need to do in order to qualify for a mortgage? The requirements have become stricter since the housing crisis from 2008, but this does not mean that you don’t stand a chance. The most important thing is to be smart and disciplined when it comes to money and employment. Find out how to achieve this and to reach your ultimate goal – buying your dream home.
1. Don’t make major credit moves before applying for a mortgage.
You should not get a new credit card in the six-month period before you apply for a home loan. Similarly, you should not take out tribal installment loans for financing purchases. Such a move would be a sign to lenders that you are short of money and you need more cash. In this case, they will be less likely to grant you the funds you need for buying a house.
If you have to use more credit in order to boost your credit score, you should postpone the purchase of a home. The waiting will be worthwhile since you will eventually get approved and secure more affordable terms and conditions.
2. Keep funds where they are.
You should not use your savings in the months before applying for a mortgage. Stay away from making large purchases that will drain your savings account. It is equally important not to move major funds from one account to another. The lender may see such moves as a sign of financial instability and reject your application automatically.
3. Stick to your current job.
Lenders are more likely to approve the mortgage application of a person who has kept their job for two years than the application of someone who has changed their job several times in the same period. Again, this is because they are looking for stability. If you plan to work in another company or industry, you should make the switch well before making the application or after purchasing your home.
4. Go for a traditional property.
You have to keep in mind that the lender considers all possible risks before granting you a loan. If you plan to buy a single family home with two stories or in ranch style, you are more likely to get approved for financing. This is simply because in case you default on the loan, the lender will be able to sell such property easily and avoid loss. If you plan to buy a house with sliding glass walls or a condo in a building which uses only green energy, you will have lower chances of securing a loan. This is because the future demand for such properties is hard to predict.
5. Use additional funding sources.
The larger your planned down payment is the more likely you are to get approved for a mortgage. Furthermore, the loan will be cheaper as well. Hence, it makes sense to use additional sources of funding. Your parents may be able to help you with some cash, for instance. You can also consider selling any assets that are of high value. These are just some general ideas, but it is important to give them and other possible options a thought.
If you follow these tips, you will have much higher chances of getting a mortgage which matches your requirements and budget perfectly.
