Your Mortgage Application: 4 Tips for Getting Approved
You’ve finally found your dream home, and you can’t wait to live in it. But, before you can make your dream into a reality, you’ll need the money to buy it. Time to work on your mortgage application.
Applying for a mortgage isn’t the easiest process to go through; after all, this is one of the biggest investments you’ll ever make! Lenders will scrutinize every detail to ensure they get repaid if they lend you the money to purchase the house of your dreams. The mortgage application is a process, and you can help it run smoothly by knowing how you to qualify for one.
In this article, we’ll share four practical tips on how to get your mortgage application approved:
1. Assess & Fix Your Credit Score
Do you know your credit score? If you have a poor credit score, consider working on it before applying for a home loan. You can still apply for a mortgage despite a low credit score, but you’ll be given higher interest rates. This may put you in more financial stress in the future.
In Canada, credit scores are typically between 300 and 900 and run across five categories—poor, fair, good, very good, and excellent. Lenders will use your credit score to gauge your ability to repay the loan. The higher your credit score, the more likely you’ll be offered lower rates.
Tips for increasing your credit score: pay bills on time, pay off your existing loans or credit, and don’t use too much of your available credit.
2. Save For A Bigger Downpayment
When purchasing a home, remember that you need a certain amount of cash upfront – the downpayment. The bigger the downpayment, the better. If you need to borrow less, you’ll pay less interest. It’s vital to save up for your home’s downpayment ASAP.
Side note: getting approved for a mortgage also relies on the downpayment.
3. Maintain A Stable Income
Don’t quit your day job. If you don’t have any proof that you can make payments, such as having a stable job, your application will likely be declined. Keep your full-time job. One of the aspects that lenders look at is how long you’ve been with your employer—if you’ve been with a company for a long time, it can help your application.
4. Get A Pre-Approval
Get a pre-approval before anything else. This is when a lender evaluates your financial situation and pre-approves you for a set mortgage amount, interest rate, and term. Keep in mind that what you will get is only valid for 90 to 120 days. This is an excellent strategy to use because it will let you search for homes within your price range.
Applying for a mortgage is a big deal, but it doesn’t necessarily have to be a stressful one. You can make the process run smoothly by following the four tips shared above and having a professional by your side to help you every step of the way.
Contact our team of Langley Mortgage Brokers for a free mortgage consultation today!