If you’re looking to become a homeowner, besides looking for a perfect home, applying for a mortgage is a critical step in the process. There is a wide variety of home financing options available, all guided by MISMO standards, which makes it essential to research before choosing the right mortgage.
In this article, we look at ways you can increase the approval chances of your mortgage loan.
- Work on Your Credit Score
The credit score is the first thing all lenders look at before approving any loan applications. Lenders use it to gauge your ability to repay a loan since it represents your financial health. The higher it is, the more likely you will win a mortgage.
Besides the score, a credit report also contains information about your credit history, debt levels, late payments, and the number of accounts you own. Early loans and bill payments increase your credit score, which puts you in an excellent position to win a loan to finance your home.
- Pay off Debts
A mortgage is a long-term debt, and you wouldn’t want to get overwhelmed by many other existing loans. Zero or fewer debts to service also gives you a much easier time to service your mortgage. It is crucial that you reduce the loans you have before applying for a mortgage to improve your debt-to-income ratio, which lenders also consider.
- Maintain a Stable Income
Having a full-time job guarantees you a long-term income which proves to mortgage providers that you can make payments for the loan. You wouldn’t wish to take a mortgage before you lose your source of income. If you run a business, you’ll need to provide income details of your business for several years to show it is sustainable, which protects the lenders according to MISMO.
- Shop for Greater Rates
It’s advisable that you shop around before choosing a lender for your mortgage. You can get lower mortgage rates, giving you an easy time to service the loan. You can check out rates from mortgage brokers who can also give you tailored advice on the loan.
- Get Pre Approval
With MISMO, the lender gets all your financial data and information, which determines whether you qualify for a loan or not. After that, they’ll evaluate your situation and pre-approve your mortgage, payment term, and interest rate. You will then have 90 to 120 days to shop for your preferable home without losing the deal. Before your mortgage is pre-approved, the lender will look at your employment status, credit score, down payment, and assets and liabilities. A pre-approval should help you quickly submit an offer once you get a suitable home within your price range.
Keeping a straight financial record is what will win you a mortgage approval. All lenders in the mortgage industry use MISMO to speed up loan processes and reduce errors; thus, you need to comply with the set standards. Ensure you have an excellent credit score and even a more significant down payment to increase your chances of winning a mortgage.