Applying for a home loan is likely the biggest financial move you’ll ever make, so you have to understand the different ways to impress a mortgage lender as this will increase your chances of having your application approved.
Here are some tips to impress a mortgage lender and qualify for the home of your dreams.
1 – Be prepared
Being prepared and knowing what the mortgage lender requires is one of the best ways to impress him. Don’t apply for a home loan if you don’t have cash for a down payment. Conventional loans require 5% down. If you really want to impress a lender, bring 20% to the table.
2 – Increase your credit score
If you’re looking to impress your mortgage lender, do the necessary to build an A+ credit score. This will allow you to get the best interest rate. Paying your bills on time and reducing your credit inquiries will help you.
3 – Pay off your debts
A high debt to income ratio can stop a mortgage approval. To qualify for a mortgage, you need to pay down your balances. Be aware that there are efficient solutions to pay off your debt. This will also increase your credit score.
4 – Have a backup cash reserve
Having money for a down payment isn’t enough to qualify for a home loan. Some lenders ask to see bank statements and require applicants to have a two or three-month cash reserve. This financial cushion is helpful in the event of a financial emergency, such as a job loss. The more cash you have stashed away, the easier it is to qualify for a home.
5 – Understand the process
Before applying for a mortgage, go online and educate yourself on the process. Your mortgage lender may use a lot of finance language, of course you can ask questions for clarification, but the process will go faster if you have a general understanding.
6 – Be available
The loan approval process can take time, and your lender may call you with additional questions. Make sure you’re accessible to provide him with the necessary information (copies of bank statements, information on investments and assets…).
7 – Have documentation ready
A mortgage lender will not approve your application without first reviewing your income history. Lenders require at least two years of income statements (tax returns, 1099s or W-2 forms…). Applying for a mortgage without these documentations can slow the process.