Take These Three Steps To Help Ensure Mortgage Loan Approval
As lenders have tightened restrictions on mortgage loans in order to protect their assets, it has become integral for prospective homeowners to take steps to maintain optimal financial health in order to qualify for home loans with satisfactory terms. The following tips may help buyers avoid bumps in the road in the pursuit of the American dream.
Address credit report errors
Credit report errors – large or small – can seriously impact a prospective home buyer’s ability to get a mortgage loan. It’s free to check your credit report once per year through the three major credit reporting agencies, but many banks, credit cards and independent services also offer monthly access to this all-important financial information. Any errors, especially with regard to debt, should be addressed and corrected immediately.
Show a pattern of stability
Mortgage lenders are looking for signs of stability that indicate less risk. One of the best ways to establish a pattern of stability, even through a series of job changes and moves, is to remain loyal to one bank over time. With the advent of so many online banking tools, this is easy to do even when moving to an area without a physical branch. Experts recommend keeping a checking or savings account with the same institution for at least five years.
Resist credit card debt
Some debt is unavoidable these days, especially student loans. Mortgage lenders expect this and won’t typically hold it against a loan applicant. However, mortgage lenders do evaluate an applicant’s debt-to-income ratio, so it’s important to avoid any extra debts, especially of the credit card variety. Paying down as much debt as possible – especially high-interest debt – will help smooth the way for mortgage approval.
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