At one point in time, it was easy to get approved for a home loan. However, the sub-prime crisis changed everything. Today, the banks are very cautious when it comes to approving mortgage loan applications. Thus, it becomes imperative for you to know your eligibility as well as the readiness of the lender to deny your housing application.  We shall share with you some important tips that could help you to get a home loan.  Click here to learn about the types of home loans.

1)      Know your credit score:

In today’s times, it would be easy to know your credit score. You should what is your credit score before applying for a housing loan.  A missed payment on your credit card or vehicle loan will reduce your credit rating.

An identity theft can do irreparable damage.  Hence, you should know and check your credit score regularly.  A good tip is to at least check your credit score every year on your birthday.  Home loan lenders look for a minimum rating of around 680. Anything below 680 can result in the bank denying your home loan.

If your credit score is below 680 then we recommend that you seek the help of a reputable credit repair company.  Click here for the credit repair agency that we recommend to our clients.

2)      Be ready with a down payment:

In the earlier days, banks used to finance the entire home value amount as loan. Nowadays, the banks insist on a down payment of a least 3.5% and sometimes as high as 25%. You should have this amount in your account before applying for the home loan.  Banks have denied a home loan to many people because of this factor.

3)      Stick to your job:

Changing jobs is not new in the industry.  However, you should avoid changing your jobs in the midst of your loan application. A new job will cause an issue with your financial status. The banks would have to appraise the home loan taking into account your new salary and allowances.

4)      Keep your credit slate clean:

If you have any outstanding debt, it is always advisable to pay it off before applying for a home loan.  In case, you are not able to repay the debts entirely, you should ensure not to keep any installments pending.  Usually, the banks insist that your monthly debt payments should not exceed 40% of your gross monthly income. In case you have existing loans, your eligibility amount would reduce.

5)      Have a pre-approved loan ready:

Many mortgage lenders pre-approve applicants subject to the satisfaction of certain conditions. They arrive at this amount based on your financial details, credit history, and employment history. Having the pre-approval on hand will help you to find within your means.  Otherwise, you could end up shopping for a home that you can’t afford.

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