Getting a mortgage loan is the first step to getting your dream house. And while many think this is something very easy to do, the truth is actually quite opposite.
That’s why we thought we give you our take on the easiest ways to get a mortgage loan. Don’t go anywhere as we’ll start right now.
Save Big On A Big Deposit
In the world of financial real estate, it’s all about paying the least amount of money possible in the long term. Since you’re reading this article to find out the easiest ways to get a mortgage loan, we’ll there isn’t an easier way than this.
If you can put a down payment of 35% to 40%, then you will pay the least when it comes to interest rates. What this means is that the easiest way to get a mortgage loan is to save money beforehand.
If you’re a first-time home buyer, then it’s smart to read up on a couple of money-saving tips.
Do Good On Your Credit Score Rating
You have to have a good credit score rating to be approved for a mortgage loan. Not only that, but you’ll also get the most favorable rates.
Homebuyers with a good credit score are a safer financial investment than those with a poor credit score. This means that lenders will feel more inclined to give you better rates.
When it comes to your credit score rating, we’ll you’ll need to check it first to know where you stand. If your credit score rating is poor, then it’s best to start working on it.
There are a few ways to improve it. For starters, you might want to consider eliminating your debt. The less in debt, the more money you have. Secondly, you’ll want to pay your bills on time as this has a major impact on your rating.
If you fall behind in paying your bills, then the bank will be less inclined to approve you for a mortgage loan. We also advise that you don’t close any unused credit cards as this way you’re maximizing your credit utilization ratio.
There are plenty of other ways to increase your credit score rating. Ultimately, the higher the rating the bigger the chances of being approved for a mortgage loan.
Don’t Buy A Shady Property
This one is also proof that it’s not always about the money. It can be hard to buy the dream house, even more so in these harsh times. But even if you have the money, do know that you will have to talk to lenders about the property that you wish to buy with the mortgage loan.
This means that the lenders will also inspect the property before giving you the loan. Lenders do this so they know what sort of property they will be financing. If the property looks shady, suspicious, or very unusual, then they might reject your mortgage loan application.
So, we suggest you stay clear from such properties even if they can be quite affordable sometimes.
Clear examples of such properties include flats above cafes, restaurants, bars, and properties built using concrete or steel.
Have All the Documents Ready
When it comes to the nitty-gritty, the easiest way to get approved for a mortgage loan is to simply have all the right documents. When talking to lenders, you have to show them that you want to be a customer.
Lenders won’t take you seriously if you’re doing the opposite. To prevent such misunderstandings, you have to show up at your meeting with all the right documents.
For starters, you will need to have an up-to-date passport and a driving license with the correct address. Secondly, you will need to confirm that address so you should carry a utility bill that clearly states the address.
Thirdly, you will need to do good on your credit score rating, show your payslips for the last three months, and any other documentation of other income besides your workplace.
These are some of the most vital documents that you have to have on you so the bank will see you as a customer.
For Self-Employers, You Have To Show Earnings
If you happened to be self-employed, then do know it might be harder to obtain a mortgage loan. While this is far from an impossible task, self-employers make banks very uneasy.
For employees working a full-time job, showing earnings is very easy. But for self-employed workers, then there are is a catch to it. Namely, you will have to provide more documentation. For instance, they will ask for your DBA, CPA, evidence of insurance for your business, any licenses that you might have, and other things.
To know exactly what documents you’ll need to show, you should talk to your lenders about it.
Decide On the Type of Loan
There is no one specific mortgage loan. Quite the contrary, there are a couple of types out there. Before you settle on one, you should familiarize yourself with the rest so you’ll know you’re making the right decision.
- Conventional Loan
This type of mortgage loan is the most common one. They’re given by private banks, unions, or even online lenders. These loans are very strict and ask for much higher down payments.
- Government-Backed Loans
These types of loans ask for a much lesser down payment and are generally seen as much more favorable. While they are still obtained through private banks, unions, and online lenders, it is the government that ensures the funds.
- Fixed-Rate Loans
A fixed-rate loan tells you exactly how much money you’ll pay each month on your mortgage payment. This is what makes them so favorable and so safe.
- Variable Interest Rate
As a complete opposite to the previous type, these loans come with variable rates that are more favorable in the first few years of the duration of the loan. But what makes them unsafe is the fact that the rates shift according to the market. It’s not unheard of for the rates to change multiple times throughout the duration of the loan.
Finishing Thoughts
Getting approved for a mortgage loan isn’t an easy thing. But it is the first step towards the process of becoming a homeowner. Luckily for you, there are plenty of ways to make sure that you do indeed get approved. And while it’s virtually impossible to do it overnight, some of these tips do offer a fast and easy way of getting the desired outcome.