Getting an approval for a new home loan is not as easy as it used to be. Unfortunately, because of the sub prime disaster, things have really tightened up in the mortgage industry. Lenders are being much more cautious in deciding who to issue new home loans to. In order to improve your chances of getting an approval, you should take the following steps before applying.
1) Improve your credit score or credit rating. Previously, a credit score of 700 or more was considered stellar by most lenders. That number has now gone up. A credit rating of 740 or more is now considered stellar. You should do what you can to get your score up to this point. Remember to check all three bureaus to make sure that your score is that high on all three. Consulting a credit repair specialist is a good idea. Many mortgage brokers will offer this service and some will even do it for free if you fund your home loan through them.
2) Debt to income. The debt to income ratio lets lenders know how much money you make, and how much money you have to pay out every month. This gives them an idea of how able you are to repay the loan by making the mortgage payments every month. While it can be difficult to improve your rating by increasing your income, you can take several steps to reduce your debt. Pay down credit card balances and pay off existing loans that you can afford to pay off.
3) Down payment. The more money you put down, the more likely you are to get an approval. First of all, the more you put down, the less you have to borrow and the greater your likelihood of getting approved is. Secondly, it shows the lender that you are financially responsible enough to save up a significant amount of money.
| Do not apply until you are ready! Prematurely applying for a new home loan can ruin your chances of approval and ultimately, home ownership. For specific advice, visit the free informational resource, the Online Home Loan Directory. For help in securing a home loan with bad credit, visit Poor Credit Mortgage Loans. Article Source: http://EzineArticles.com/?expert=Jennifer_Lynn_Hanson |  |
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