Improve Your Chances of Approval

Pre-Approved Choice Mark Selection Status Option Concept

Are you applying for a home loan?

Pre-approval is the first step in the mortgage process and ensures that you are able to receive a home loan based on your credit scores and credit history. That being said, it is beneficial to know how to get pre-approved on your first try. Here are some tips to increase your chances of being approved for a mortgage!

1. Take Early Steps

  • Request a credit report from all 3 of these reporting agencies: Experian, Equifax, and Transunion. Double check to make sure the information on them is correct.

    • Your credit score is vital throughout this process and will be more beneficial to you if you do this step way ahead of time. Use these scores to determine if you need to build your score before applying for a home mortgage. This could save a potentially awkward situation with your loan officer if you have low credit. A score of at least 620 is needed to qualify for a conventional mortgage and a score of 740 or higher will ensure better rates.

  • Having the down payment saved in your bank account, if possible, is a step that will help you in the long run as well.

2. Manage Debts

  • Pay off your credit cards and other accounts you may have, and try to pay off your bills on time and in full every month, if possible. These steps can help to improve your credit score.

  • Maintain stable employment especially throughout the home loan process because a lender will calculate your average income based on your past 2 years pay.

  • Improve your debt-to-income ratio. According to Zillow, 36% or less is ideal in order to obtain a home loan. Click here for a debt-to-income ratio calculator!

  • Having cash reserves available is helpful because it ensures that you can still make payments despite a potential financial setback. Try not to make any large purchases or take out other loans before you apply for a mortgage pre-approval.

3. Disclose All Information

  • Being up front and honest with your mortgage broker is key to making the pre-approval process run smoother and quicker. Give reasons for missed and late payments or other issues that you encounter during this process.

  • Usually during pre-approval, you will need to provide several documents such as thirty-day pay stubs, two years of federal tax returns, two years of W-2’s, 60 days of all asset accounts (including checking, savings, and any investment accounts), and other paperwork depending on your personal circumstances. For example, if you have filed for bankruptcy then you will need to provide a copy of the documents. Having these papers ready to go will help spare time and effort, and ensures that you are applying for the right loan.

Getting a pre-approval done early has several benefits. Not only will it allow you to search houses in your price range so you don’t waste any time, but there is also a higher acceptance rate for buyers with pre-approvals ready. Cut down your stress by getting pre-approved today!

Share

Leave a Reply

Your email address will not be published. Required fields are marked *