Unless you have the money to pay for a house in cash, you would need to apply for a home loan. Applying for a home loan, however, follows strict processes. Proving to lenders that you’re capable of paying is one of the things you’d deal with in case you’re going to apply for a home mortgage loan.
Not everyone gets approved instantly, but you can be if you follow these five tips.
Prove Income Stability
Lenders do not just base one’s ability to pay by how much money a person earns. Although the figures are important, they also look at whether the person’s source of income is stable. The best way to prove this is by staying employed. Being employed for more than a couple of years increases the chance of being approved.
Work on Your Credit Score
A high credit score also improves the chances for approval. Checking your credit score online only takes a few minutes. From there, you’ll know what areas to work on to improve your credit score. The credit score requirement varies depending on the type of loan. For example, the lowest score for an FHA loan should be 580, whereas a VA loan often requires a 620.
Improve Credit History
Lenders look at the credit history to gauge one’s ability to pay debts. Reports that show no credit history is as bad as reports with many unsettled balances. Improve your chances of getting a home loan in Ogden approved by fixing your credit report. Settle old balances, pay existing debts on time, and fix disputes if there are any.
Save Money for Bigger Down
Most lenders only require a 3.5% down payment, but paying a bigger down would prove to lenders that you know how to save money. Another benefit of a bigger down payment is the lower loan-to-value ratio. When you pay a 20% down payment at least, you would be exempted of PMI insurance, which means lower mortgage rate.
Get a Guarantor
Another way to convince lenders to approve a home loan is by getting a guarantor. A guarantor is another person who is capable of paying the debt in case you could not fulfill your obligation anymore. However, the guarantor must be aware of and agree to the Loan Agreement in the first place.
It is not that easy to get a home loan approved. You have to prove to lenders that you’re a good payer for doing these things. Before you apply for a loan, make sure that you have enough time to work on these aspects before giving it a try. Who knows? You might get approved at one shot.