Getting a mortgage can be a hard process. Here are some tips to know to improve your chances of getting a mortgage, including: improving credit rating, paying off debt and avoiding lavish purchases and job changes.
Below are 3 tips to improve your chance of getting a mortgage:
Improving Credit Rating
If you have had serious debt problems in the recent past then you are going to struggle to find a lender willing to take you on, but if your transgressions are more minor you might be able to do something about it.
Take a look at your record yourself to ensure you do not get penalised as a result of someone’s mistake. The major credit reference agencies all offer access to your records, some on a free trial basis. “If you’ve any doubts about what they show why wouldn’t you check them when you can do it at little or no cost?” says Hollingworth. If there are errors, you can contact the organisations involved to correct them. If there are problems that you think might cause a problem, flag them up at the earliest possible opportunity. Source: TheGuardian
Paying off Debt
Reduce your total debt — your monthly payments on cars, student loans, credit cards — before you start the mortgage application. The goal is to reduce your overall debt-to-income ratio and improve your credit score. The somewhat unrealistic guideline that lenders want everyone to toe is that your total housing expenses not exceed 28% of your monthly gross income. For decades, people have exceeded that quite happily but now the lenders believe they know best and they control the money. Source: DailyFinance
Avoiding Lavish Purchases and Job Changes
Don’t run out and buy cars or run up credit cards before you buy a home because it will impede the amount you can qualify for. In addition, don’t change your job within six to eight months of buying, because a lender will look at that, but Turner says, depending on the industry you work in, if it’s a natural progression, it will be looked at differently. Source: WhichMortgage.ca