Having a home to call your own is everyone’s dream. When you manage to achieve it, you will get a feeling of greater achievement that is somewhat hard to explain. All we know is that it makes us happy and that is all that matters.
It was somewhat easier to own a home some time ago. You still had to either have money on hand or go get a mortgage for it but it was generally easier than it is now. With how banks operate and with the entire pandemic and (near) financial crisis we all have our work cut out for us when we are on the mortgage hunting job. There are so many hoops to jump, so many papers, so many conditions to fulfil that it makes us all crazy and generally discouraged to even try and get a mortgage on our new home.
The article today will discuss this topic a bit in-depth and we will try to bring you closer to all the things you need to do, and what to expect to be accepted for a mortgage request. With the help from this website, we managed to compile this list so if you won’t give them a check and say thanks.
So, to make sure that your mortgage request will go through and that you will be accepted you need to have everything in order starting from:
1. Good credit score
Now, whenever you go to request something from the bank they tend to turn you inside out and to check everything about your life to make sure that you are eligible for their loan and to have them assured that the loan will get repaid. Now, these checkups are done through your credit score. Now we will not explain this in detail because if you have or had at least one loan on you you are well familiar with this score rating and what it does for your future loans. Now in 2021, you will need to have a minimum credit score of 620 + FICO but do understand that this will also take into consideration a down payment, type of property, location etc… Now this is somewhat a low credit score and most of the lenders will probably have a tough time giving you a mortgage or loan on this credit score but in theory, you will be able to get one with this score it will just be a lot harder. The higher your score is the loan will come to lot easier.
Now you would be silly to expect that a bank will issue any kind of loan or mortgage to someone who doesn’t have steady and constant employment. This is normal because this is the way that every lender makes sure that you can repay their money. Now when mortgages are in question the best way to make sure that you will be accepted for one is to have a steady job that is frequently paid and you will have to prove that with pay stubs covering the last month, but this is not where it ends. To prove you have a regular paycheck you will need to get a recent bank statement to form last two or three months depending on the lenders’ requirement and some other paperwork with that. Now you probably are asking what about those of us that are self-employed?! They can also apply for a mortgage but they have to provide business and personal tax returns from as far as two years back and have your most recent earning statement as well as bank earning statement for three months.
3. Down payment
Down payment is something that comes in handy when you are applying for mortgage loans. Down payment is something that will surely give you an edge over those that don’t have any or are putting down minimal amounts just to be able to apply for a mortgage. The bigger the down payment the more favourable terms are presented to you as well as the most increase in the chance that your mortgage request will be accepted. Now as far as the amounts of down payments go, 3% is the least you can put down just to apply for a mortgage and when you go higher than that with 5% or even 10% the terms get a lot more favourable and the chance of you getting the requested mortgage significantly increase.
Another thing that can greatly aid you in easy mortgage obtainability is some form of assets you have. Assets can be anything from 401k to stock accounts, checking, savings anything that can show your lenders that you have some money in the bank. This shows them that there is a place where the payments are coming from but it also shows them that you have something to fall back to, god forbid you to run into any sort of employment or health issues. Another thing that can also interest your lenders is the reserves. Reserves are money that is leftover in your account after you put your down payment and after you pay your closing costs. Sometimes your lender will ask you to have at least two months’ worth of reserves to accept your mortgage request, so if you can save some cash for this to boost your chances.
5. Find a mortgage professional
A great way to boost your chances and odds of being accepted for a mortgage request is to find a mortgage professional to talk to. After you find that property you want and after you have settled on buying it the best next thing is to find a mortgage professional and find someone that understands the business, that his reputation and that has been doing that for some time. This is important because these types of pros can take good care of you and guide you top a good direction. After all, this is what they do and what they live off. They know what to focus on, they will advise on what to gather, when it comes to documentation, they will give the best advice on interest, down payments, and generally what to do and what not to do when you are applying for a mortgage.