There are steps you can take to get the best deal and make your mortgage lender more likely to approve your loan. In this article, we'll discuss what measures you can take to ensure a successful application.
The first step is to make sure you have good credit. A good credit score will give lenders the assurance that you're a reliable borrower. In particular, you should focus on keeping your credit utilization low, meaning you should have less than 30 percent of your total credit limit sitting in debt. Additionally, you should make sure there are no errors or inaccuracies on your credit report before you apply.
Another important factor to consider is your debt-to-income ratio (DTI). Lenders want to make sure that you can handle the payment each month, so they look at your DTI to see if you have too much existing debt. Your DTI is calculated by adding up all of your current payments and dividing by your total income. It's best to keep your DTI below 43 percent, as lenders want to see it around 36 percent.
Finally, you need to save for a down payment. Saving for a down payment is important because it demonstrates to lenders that you are financially responsible and can manage your money well. Plus, lenders will be more likely to approve your loan if you have a larger down payment. This is often seen as a sign of commitment and stability.
In conclusion, getting approved for a home loan doesn't have to be difficult. Taking the right steps, such as making sure you have good credit, keeping your debt-to-income ratio low, and saving for a down payment, can greatly increase your chances of being approved. As long as you are mindful of these factors, you should be able to successfully get approved for a home loan.
This article was contributed on Dec 09, 2023
