Getting a mortgage is far much different from renting an apartment or applying for an auto loan. There are specific things you need to observe in order to get approved.
Understand Your Credit Score
The first thing you need to do is to pull your credit report and request for a credit score. A majority of lenders require a credit score not less than 680 or 620 for FHA mortgage loans. In addition to your credit score, the lender will check if you have any missed payments, frequent lateness and any other bad credit information you might have on the report. Take care of your bills in time and reduce your debts to increase your chances of getting approved.
Save for Down Payment
Lenders require down payments ranging between 5 and 20 percent of the total value of the house you want to buy. You need to start saving for this as early as possible. We recommend starting a monthly budget to help you free up some money. You can also automatically channel a portion of your monthly income to a saving account to make it simpler and convenient to raise the money for the down payment. In case you are unable to come up with enough down payment, you should inquire about FHA loans. These loans are designed for buyers who cannot raise a large down payment.
Talk to a Mortgage Broker
You need to find a mortgage broker to make the process successful and less stressful. A broker will gather important information, such as income asset, employment documentation as well as your credit report on your behalf. Once he acquires all the information needed, he will determine what will work best. This may include calculating the loan amount you qualify for, setting loan-to-loan value and determining the type of mortgage loan that suits you best. Once every detail is ironed out, the broker will submit the request to the lender he works with for approval. Loan requests made by mortgage brokers are rarely rejected by lenders because of the good working relationships that exist between the two parties. You can visit Tri-State Mortgage of Denver to know how a mortgage broker can help you.
Do Not Quit Your Job
There are some people who quit their jobs one week before they close their mortgage loan. Do not quit your job, as you are likely to lose the deal. Any changes in your employment status might affect your income report. This can in turn stop or significantly delay the mortgage process. Lenders approve mortgage loans based on how much you can repay every month. Taking a job that pays less than what the lenders expect quitting your job to become self-employed will force the lenders to reevaluate your application, which might take months.
Getting approved for a mortgage requires careful planning and determination. Do not give up, even if you are not approved the first time. Many people have turned around their credit, bankruptcy, repossessions and foreclosure problems by simply working with a mortgage broker and implementing realistic plans.