Accounting & Finance
How to Boost Your Chances of Getting a Home Loan
Do you dream of owning your own home? If so, you may also think about home financing and wonder if it’s going to be easy or hard to get. Today, we want to share information about how to boost your chances of getting a home loan. Since few people are able to pay for homes outright, most do need mortgage loans in order to enjoy the benefits of home ownership.
Our tips will help you to build the type of credit score that gets your home loan application approved. Lenders will look at your credit score and decide if you’re high risk, low risk or something in between. The higher the credit score, the better. A high credit score means that you’re low risk!
How to Improve Your Credit Score
First, consider your credit score. It is good or bad? It’s possible to get copies of your credit reports and we recommend doing so. Next, look at the credit entries. Are any facts wrong? If there are mistakes on your credit report, you’ll be able to bring them to the attention of the “big three” credit bureaus (these facts are for America – if you’re in another country, there will be different credit bureaus. You can work with a professional credit repair company, such as Sky Blue Credit Repair, who will do this on your behalf.
The credit bureaus are TransUnion, Experian and Equifax.
Write letters to these bureaus, disputing incorrect credit entries. The credit bureaus will have to investigate and it may be possible to get incorrect credit entries removed. This will boost your credit score immediately.
Now, let’s talk about more things that you can do in order to improve your chances of getting a mortgage.
Apply for Home Loans Selectively
It’s not smart to apply for mortgages via a lot of different lenders. While you should always compare many lenders, it’s best to research lenders carefully and then decide where to apply. Every application for a loan that you fill out will become a part of your credit report. It may hurt your credit rating if you apply at a bunch of different financial institutions around the same time period.
Show Proof of Stable Employment
Getting a home loan is all about showing a prospective lender that you’ll be able to repay the loan as per the loan terms and conditions. If you don’t have stable employment right now, you should know that finding stable employment will help you to send a message that you are credit-worthy. In general, lenders want people to work at the same places for at least half a year. They don’t like lending to people who are still going through their probationary periods.
If you changed jobs within the past six months, but you’re working in the same field, for a different employer, this may be enough to please the prospective lender. However, you should be prepared to hand over employment details to the financial institution where you applied for the home loan. When a loan officer asks you for details, provide them and don’t leave out any information.
Be Honest About Everything
You should be very transparent about your financial and employment life when it’s time to apply for a mortgage loan. If you don’t, it may hurt your chances of getting your loan application approved. For example, if the bank discovers credit cards that you didn’t disclose on your application, or other debts that you didn’t let the bank know about when you applied, the bank’s loan officers may get a bad feeling about you and turn you down for a mortgage.
Make Payments on Time
If your credit score isn’t perfect, it may be because you’ve made late payments in the past. The best way to show banks that you’re a good credit risk is to pay your bills on time from now on. Pay them before their due dates just to be on the safe side. When you begin to make timely payments, you’ll put good credit after bad. While it’s not possible to boost a credit score dramatically overnight, unless you get entries removed because they are incorrect, you will improve your credit rating slowly when you begin to do all of the right things.
When you follow these tips, you’ll improve the odds of getting approved for a mortgage.