It’s no secret that there are many obstacles that often arise when trying to get a mortgage. Among those obstacles are poor credit scores, not enough money in the bank, or no knowledge of the process.
Here are some helpful tips to assist you in improving the your chances of landing the mortgage loan of your dreams.
Boost Your Credit Score
Your credit score has a significant effect on the type of loan you will be able to receive. You typically need a credit score of 620 or above to be considered for a standard mortgage. You will also need to have a score of at least 740 or higher to be qualified for the best rates.
The best way to enhance your credit score is to:
Make payments on time
Utilize websites like credit.com and creditkarma.com to check the status of your credit, debt, and payment history.
It is common for lenders to check and then re-check your credit report during your mortgage application process. Missing a payment during this process has the ability to lower your credit score and as a result may have a negative effect on your loan.
“If you miss a payment during the loan application process — particularly a mortgage payment — and the lender re-checks your credit report, it could result in a much lower credit score and could derail the loan application,” said Anastos.
Remember, your credit score can keep you for getting a mortgage or affect your mortgage rate (more on that below).
Pay down your debts
Lenders are more often than not willing to lend money to individuals who do not need it. Therefore, the less debt you have, the more likely it is that you will be approved for your loan.
Make sure your paperwork is organized
The amount of items necessary to apply for a mortgage loan is pretty extensive. Try your best to have any and everything you need before you begin the process.
Items you will need to have include:
- W-2 forms for the past two years
- Paycheck stubs from the past few months
- Proof of previous mortgage or rent payments for the past year
- A list of all your debts ( credit cards, student loans, car loans, etc.)
- A list of all your assets ( bank statements, auto titles, real estate, investment accounts, etc.)