3 Tips That Can Help You Qualify For A Mortgage Loan
For most people, buying a house will require them to obtain a mortgage loan. Unfortunately, getting approved for this type of loan can be a struggle for many people. If you are worried about whether or not your loan application will be approved, the three tips below can help to increase your chances of getting the mortgage loan that you require.
Tip #1: Don't Close Open Or Close Credit Accounts Prior To Applying For A Mortgage Loan
When considering your application for a mortgage loan, lenders will look at more than just your overall credit score. They will also look at the length of your credit history. This is because lenders want to know that you have a significant history of being responsible when it comes to repaying your debts. In many cases, lenders will look at the average age of your open credit accounts in order to determine if the length of your credit history is sufficient. Choosing to open new accounts or close long-standing accounts can shorten the length of your credit history and hurt your chances of being approved for a mortgage loan. Consequently, you will want to avoid opening or closing any credit accounts prior to applying for a mortgage.
Tip #2: Make Sure That Any Cash Savings You Have Is Deposited Into Your Bank Account
Another factor that lenders will consider is the amount of cash assets you have available. This is important because lenders want to know that you have ample savings to pay your mortgage payment for several months even if you have a sudden loss of income. If you have savings that are not being held in your bank account, you will want to deposit these cash savings before applying for a mortgage. This money can be withdrawn after your loan is finalized if you prefer to keep this money on hand rather than having it in the bank.
Tip #3: Try To Limit Your Spending In The Months Before Applying For A Mortgage Loan
Lenders will look closely at your financial situation when considering your loan application in order to determine whether or not you can realistically afford your monthly mortgage payment. If you appear to be overextended financially, lenders will be more likely to deny your application for a loan. This is why it is important to limit your spending in the months before applying for a mortgage. This is especially true if you are making purchases on credit since this can increase your overall debt-to-income ratio.
For more information about mortgage loans, contact a local lender.