Having a home of your own is something everyone aspires for. However, post the real estate crisis of 2008-09, home mortgage norms in the country have become stringent to ensure that a housing market crisis never happens again.
Hence, it is always useful to be aware of the factors that need to be considered when you or a known associate applies for a mortgage. When you approach a bank or any other financial institution to process your mortgage, the documents go to an underwriter who is responsible to take you through the entire process. The underwriter reviews your current and past loan history as well as the supporting documentation to verify whether you (and the co-applicants) meet the stipulated loan program guidelines or not.
However, before you initiate the process of going to a financial institution, you should be aware of the ways to ensure that your loan process is smooth and seamless. Here are some useful tips to ensure your home mortgage gets approved quickly:
- Understand the difference between a home mortgage vis-à-vis a car mortgage or even education mortgage – While you might be aware of the reduction in interest rates as well as the specific areas where home rates have gone down, this information is not enough to go ahead and apply for a home mortgage. It is important that you understand that the process of getting a home mortgage approved is different from getting a mortgage for your car or even an education loan you might have taken in the past.
- Get your credit score checked – Evaluating your credit score is probably the best way to understand how easy or difficult it would be for you to apply for a mortgage on your home. An individual can, in a matter of a couple of minutes, order their credit score. This is probably something that most of us in the country forget to do, even though we all understand the relevance of it. Credit scores happen to have the biggest impact on getting a mortgage approved, especially a home mortgage. Hence, always check if you have a credit score which is enough to qualify you for the home mortgage that you are applying for.
- Have a cash portfolio – While no one wants to put all their eggs in one basket, when applying for a home mortgage, it is always good to keep enough and more cash handy rather than investing in a diverse portfolio of other financial products. The chances of your loan getting rejected are higher if your bank balance is on the lower side.
- Keep a job – While the American dream of becoming a successful business venture owner and becoming famous might be all-pervasive, when applying for a home mortgage, it is always better to be a salaried employee, rather than being an entrepreneur. This is essential since any change to income status during the mortgage process does not go well with financial institutions and can serve as a hindrance.
- Pre-approved mortgage – There are two ways to buying a house – choosing a house and then applying for a mortgage or getting a pre-approved mortgage and then looking for a house in the same budget. While the latter approach may feel like the reverse way of doing things, it actually works better because based on your income status and credit history, a pre-approved loan amount is sanctioned. You can then scout for a house or apartment of your choice accordingly.
While the above-mentioned tips are useful when applying for a home mortgage, more often than not, what is important is to consider all financial possibilities before applying for a home mortgage and then making the most of the options available to narrow down on the most feasible option.