You’ve spent months searching online for your perfect home and hours previewing homes with your agent and now… you’ve found the perfect home. Your offer on your dream home has been accepted by the seller and your mortgage lender has been informed to start the ball rolling.
Everything is going well, when suddenly your hit a road block – you find out that your loan has been denied – Yikes! It’s no fun when a home buyer has been told that their mortgage loan has been denied and they can no longer proceed with purchasing the home of their dreams.
Getting your loan denied by a lender can be devastating for any buyer, but taking the right steps and being prepared can save you a lot of headaches.
Here are 5 steps to help you increase your chances of getting your loan approved. We want you to have a successful home buying journey.
Know where you stand: Before you even begin the process of applying for a loan, check your credit – your FICO scores may reveal issues that you are not aware of and may need to be resolved before your loan is approved. Depending on your mortgage lender’s requirements, you may need to have a higher score in order for you to obtain the loan. Take note of how much debt you are carrying from month to month and of your overall debt.
Move quickly to resolve mistakes: Don’t be caught off guard by incorrect information or delinquencies on your credit report. If you notice any, report them right away ! Pay off delinquencies immediately!
Tack debt head-on: Pay your bills on time, is not just something your grand-mother use to say – she was right! Pay all of them on time and pay them in full every month. Some debts build your score more quickly than others – find out which debts to pay down first. A reputable lender can help guide you.
Be able to show consistent income over time: Generally, mortgage lenders want to see two (2) years’ worth of tax returns and bank statements to show that you have consistent income coming in. This is often-times a setback for home buyers who are are self-employed, own their own business or depend on commissions. In order for you to be approved for a mortgage loan, you will need to show consistent earnings for two consecutive years.
Rein in spending, create a budget and stick to it: Studies show that buyers often time feel less financially secure after buying a home. You can eliminate this feeling by controlling your monthly spending long before you decide to buy a home. Put a budget in place that that will not only help you to qualify for the right loan, but help you meet your financial goals. Put aside some savings too! Homeownership brings with it home maintenance and repair costs, be prepared!
What most home buyers don’t realize is that the mortgage lending process can get pretty invasive – it takes time, sometimes tons of paperwork and often many phone calls back-and-forth between your lender and you. The best way to be prepared to is to be proactive – work on cleaning up your finances and improving your credit if needed. Educate yourself on how to address issues that may keep you from qualifying for a loan and more devastatingly – losing out on the home of your dreams.
We have reputable mortgage lenders we can refer you to. Let us help you with every step of the home buying process.