You’re tired of renting. After several years of giving away money to landlords, you’ve decided to buy your own place.
You’ll need a mortgage. Everyone does, unless you have a pit of cash somewhere. The problem is that not everyone usually qualifies for a mortgage. Otherwise, we’d all have mansions, right?
So, how do you prepare yourself for the mortgage application process so that you’re not turned down when you finally lodge an application? Below, we look at four quick tips to help you get everything in order.
Know what you can afford
Many future buyers make the mistake of walking into the lender’s office without a loan figure in their head. This is suicidal. The loan officer, being in business, will attempt to make you take the biggest loan thus guaranteeing them the biggest profits. As soon as they find out that you have the capacity to repay in time, they’ll use every possible tactic to convince you to accept more money.
Don’t make this mistake. Before you begin shopping for lenders, use the home loan EMI calculator to find out what you can afford.
Know your credit score
We can’t stress this enough. It is vital that you know your credit scoremonths before applying for a mortgage. Never assume that your credit history is good. Mistakes happen. Maybe your bank didn’t cross off the last loan even after you repaid in full. These are some of the things you need to iron out early so that they don’t impact your score when applying for loan.
Aside from that, knowing your score early gives you an opportunity to improve on the score. You need a score of at least 680 to get a conventional loan. Fortunately, knowing your credit score only takes a few minutes.
Save up for down payment
This is another very important point. Although mortgage companies once approved zero-down loans, currently, you need to have enough cash for down payment if you’re to get a home loan India. Without the down payment (which has to be paid in full before the loan is processed), your application won’t be accepted.
The only way to avoid such a situation is to save enough money for the down payment. Numerous banks such as the Axis Bank recognizes this and now allows future homebuyers to open special accounts where they can save up for down payments.
Clear up debts and avoid new debts
Finally, for at least six months leading up to the application, work on clearing up exiting debt while desisting from taking any new loans. That’s because debt is a major impact on credit scores. Unpaid debt could deny you a loan while debts that are hurriedly cleared just before a loan application might raise red flags. Ideally, you want to cut your spending by avoiding excesses. Then, put any savings toward the down payment.
If you can implement all these four tips, you’ll significantly increase your chances of getting the mortgage you so much need.
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