How do banks decide if a user is likely to pay back or not? Banks do this by taking a financial outlook on your life. You will be asked to provide certain documents in the process. It is based on your financial life that banks will decide whether to grant you a loan or not. Hence, if unfavorable they will be declined for a mortgage. However, the good news is that you can with the tips provided below become more successful with your application for a mortgage.
- 1 Keep Your Financial Records
- 2 Get a loan pre-qualification letter
- 3 Avoid moving money during the application process
- 4 Saving is important
- 5 Avoid unpaid debts
- 6 Make sure you disclose all financial obligations at application
- 7 Improve Your Credit Score
- 8 Avoid switching jobs
- 9 Ensure you attend the mortgage closing
Keep Your Financial Records
The reality is that some people are very poor when it comes to keeping their financial record. When it comes to mortgage, it is a big problem. Before any form of mortgage can be approved, it is very important that you provide their financial record to the bank. Inability to provide a financial record or the provision of a poor financial record can affect a person’s mortgage application negatively.
This is because in such a situation it will be difficult for the bank to evaluate the applicant appropriately. Try to keep a good financial record if you are considering a mortgage.
Get a loan pre-qualification letter
Ensure you prepare by having your pre-qualification letter before you begin to search for homes. Pre-qualification letter refers to the evaluation of the credit worthiness of a potential borrower. This tip will help you with the house buying process and increase the probability that your loan request will likely be approved when you apply.
Avoid moving money during the application process
During mortgage application, lenders are required to record all sources of funds used to close and provide documents showing the transactions. Moving money complicates the documentation process as it increases your workload.
Saving is important
When applying for a mortgage, the thing banks look out for is the percentage of the cost for the house that the applicant has at the moment. The higher the percentage the applicant has, the more the bank see such applicant as serious and likely to pay back in time. Also, the lower the percentage of the cost of the house an applicant has at the moment, the more the probability the bank will decline the application for a mortgage. The point here is that the higher the amount of money you can come up with, the higher the chances that your mortgage application will get approved. Try to save as much as you can before applying for a mortgage.
Avoid unpaid debts
Loans from financial institutions or individuals are another form of debts. Debts are drawbacks and will impact negatively on you getting a mortgage especially if it is unpaid or not paid promptly. Hence, before you submit an application for a mortgage, try as much as possible to clear all your existing debts.
Make sure you disclose all financial obligations at application
Failure to disclose all details may impact the loan decision and may cause a delay in your mortgage application. The disclosure of all obligations such as properties owned, child support or debt is necessary for a smooth mortgage process.
Additional information may be required after applying for the mortgage so it is necessary to set your house in order. Providing any other relevant information timely will ensure everything stays on schedule.
Improve Your Credit Score
A credit score is your financial credibility in terms of how likely you are to pay back the money you are borrowed. If you have a good credit score, the higher the chances that your mortgage application will be accepted. Otherwise, your application will be denied.
Avoid switching jobs
It is advisable to avoid changing jobs during the mortgage application process except if you are given a promotion that improves your pay. A job switch that requires a change in how you are paid could delay the mortgage process because a 2-year history of commission income is a necessary requirement.
Ensure you attend the mortgage closing
If you are unable to attend your loan closing, you can transfer a Power of Attorney (POA) for the purpose of your mortgage closing. You must approve the POA drafted by a lawyer before the closing.
Try to create a budget and live within the confines of that budget. Kindly share other tips that have made your application for a mortgage successful with other PropertyPro readers.