There are a lot of things that will prevent you from qualifying for a mortgage. Low income, poor credit score, excessive debt are just some of them. However, all of these factors are within your control. And, fortunately, there are also a lot of things that you can do to make sure that you qualify for a mortgage.
Here are some of the most important steps you can take to score that mortgage.
Improve your credit score
Your credit score isn’t important only when it comes to your credit cards. All your lenders will want to take a look at it. It’s because your credit score will show them how likely it is that you make your mortgage payments in full and on time each month.
Therefore, if you have a low credit score, your lender will consider you a higher risk. So, to compensate for this higher risk, you will get a higher interest rate. Even worse, if your credit score is below 620, you will find it extremely difficult to qualify for a mortgage at all.
People with credit scores above 800 will easily get the best interest rates available. So it’s important to improve your credit score as much as possible before hunting for a mortgage. Measures that you can take to do this include paying down your auto loan, using your debit card instead of your credit card for future purchases, paying your bills on time and more. Additionally, don’t open any other credit accounts, as applying for new credit can lower your score.
Get a better job
If your income isn’t high enough, you should consider looking for a new job where you can earn more money. Although lenders like to see a steady employment history, switching jobs can bring in more money. So don’t be afraid to do it if this is the best course of action for you.
Get rid of debt
Decreasing your debt is one of the fastest and most effective ways to increase the size of loan you’re eligible for. Your lender will want to know how much of your gross monthly income will go to your house payment and how much towards other monthly obligations, such as your student loan, credit card payments, car payments, and others.
The more debt you are required to pay each month, the lower the monthly housing payment lenders will decide you can afford, and the lower the purchase price you’ll be able to afford.
The bottom line
It’s not always easy to qualify for a mortgage. In order to protect themselves, lenders require applicants to pass certain tests. But, if you are fully committed, you can score the mortgage that you want. And these tips can help you do it.