Mortgage Application Approval, Increase Your Chances
Financial institutions are scrutinizing mortgage applications more than they have in years. Here are 8 tips designed to help increase your chance of mortgage application success.
1. Don’t lie on your mortgage application.
Lying on an application is considered mortgage fraud and it’s partly to blame for the recent string of mortgage defaults. Besides being against the law, if you’re caught lying, your application will be denied.
2. Know what’s on your credit reports.
Obtaining one copy each year from the 3 credit reporting agencies, TransUnion, Experian and Equifax, is free. So get your copies and carefully review each for discrepancies and signs that you’ve become a victim of identity theft. If you see problems, contact the credit bureau immediately to get them resolved.
3. Build up your savings account.
Lenders want documented proof that you have saved enough money to make the required down payment. They also want proof that you’ll have enough funds after closing to put towards other housing costs such as taxes and insurance.
4. Consider all costs.
Lenders use different formulas to calculate affordability and if the information on your application doesn’t meet their criteria, your application won’t be approved. Asking for an explanation can help as can shopping for different mortgage products. But what really helps is to know how much YOU can afford. Remember to consider the other costs of home ownership like insurance, maintenance, repairs, property taxes, dues and fees.
5. Gather all verification documents before you need them.
Having pay stubs, tax forms, court documents, bank and investment statements, leases, and an insurance policy readily available can expedite the loan approval process. If something on your application can’t be verified, your application may not get approved.
6. Be thorough and available.
Always write N/A for “Not Applicable” for any question on the application that does not apply. That way no one wonders if you accidentally skipped an answer. Questions will arise during the approval process so it’s in your best interest to always be available.
7. If you need help, ask.
Lenders want to approve your loan. They can help, but only if they know help is needed. Also consider getting help from financial planners, mortgage counselors, and representatives from other social agencies.
8. Take the mortgage application process seriously.
The best advice is to prequalify and get preapproved for a loan and then start looking for a house. When you finally make an offer, remember that each application you complete triggers a check into your credit history. That could affect your score, but more likely, it could negatively affect the person that’s considering lending you money.