Mortgage interest rates are incredibly low right now. While these under 3% rates might not last, you can probably expect that the low rate trend will hold steady for a while yet. If owning your own home is on the agenda, that makes the near and medium-term future a ripe opportunity.
Of course, wanting a home and snagging a mortgage for a home are two different things. It’s even trickier for first time buyers who must navigate the unfamiliar loan process. If that’s you, keep reading for some tips that will help you get approval for your new home loan.
1. Save for Your Down Payment
Saving up a down payment is one of the best ways for you to get your home loan approved. For most people, that means tightening their belts and living without some luxuries. It will pay off, though.
That down payment tells lenders that you can exert financial discipline over time. It’s one measure that encourages approval.
2. Get Your Credit Score Up
Before banks offer home loans, they will run a credit check on you. This is another area where you can exert a lot of control.
Most people start planning for a home purchase well in advance. That gives you time to check your credit report and fix any errors. It also gives you time to work on problem areas like on-time payments or old collections.
The better your credit score, the better your approval odds.
3. Get Your Documents in Order
Your lenders will want a number of documents from you, such as:
- Pay stubs
- Tax returns
- Bank statements
- IRA statements
All of these documents help the lender get a picture of your financial health and habits. If you assemble them ahead of time, it serves as a good-faith gesture on your part.
4. Buy within Your Means
If you’re wondering how to get a home loan, start with a home that’s within your means. In other words, pick a house that you can reasonable afford for your first home. That means you can pay the mortgage, bills, taxes, and still eat.
Picking place within your means makes loan approval much more likely.
5. Bring in Professional Help
You may find the prospect of doing all the legwork alone a little daunting. You can use a mortgage broker as a way of smoothing out the process.
Brokers help you find the right mortgage, negotiate rates and fees, and deal with paperwork. If this sounds like something you need, you can learn more here.
Get Approval with Preparation
The right preparation gives you the best chance to get approval for your loan. That means you must do the things that banks look for in applicants.
Do the hard work and save up a down payment. Get your credit score into shape. Put your document package together in advance.
Pick a house you can actually afford. You can even bring in professional help if you’re worried.
Looking for more real estate tips and advice. Check out some of our other posts on this site.