Before You Apply for a Mortgage
Many things can make it hard for you to get a new mortgage. Low income, bad credit score or significant loan are all issues we aren’t happy about. However, you’re responsible for all of these obstacles and there are ways to get through them before applying for a mortgage.
Getting a higher paycheck
Unless everything is fine with your income and your paycheck covers everything you need, it’s time to increase your income by getting another job. The bank will let you know how much income you need before you get your loan. They are more likely to approve your loan if you have the same employer or a profession for a long time. On the other hand changing jobs usually results in a higher salary – that’s what a lot of people know and that’s why some of them do not like this rule. If you wish to stay at your current job, try getting a promotion. Remember: part-times jobs aren’t considered a stable source of income by lenders.
About savings
Making bigger payments every month will melt your debts faster. But there are only two ways to make the extra money you need: to save or to earn more. The last one has been already mentioned, now it’s time to do some savings. From time to time there are situations where you might have to apply for a online payday loan to pay for urgent needs. This is why savings are so crucial, they allow you to avoid tapping into more debt. Cut down your spending by living on minimum and try to avoid purchasing thing you can’t afford to buy in the first place. It’s a great idea to always shop for on groceries and clothing on sale. Budgeting means having control over each and every one of your dollars. The idea is to end up with extra money each month dedicated to spend on mortgage payments or debt.
Increasing your credit score
Why does your credit score matter? That’s because it determines if you’re going to make your payments in time. The other reason to get your credit score as high as possible is to get a lower interest rate so you pay the least amount possible. If your credit score is around 800, you’re going to get the best interest rate ever. If it’s below 620, get ready to be denied in any kind of debt, especially a mortgage.
There are ways to increase your credit score such as paying off other debts, like auto or student loans, shopping with debit cards, rather than credit one, correcting mistakes in a credit repost or paying off bills on time. It’s also important to avoid opening new accounts – it negatively influences your score. This also applies on having new credit cards: financial institutions don’t like it because they’re concerned about your ability to make your mortgage payments.
Lowering your debt
If the size of your loan is too high for you, your bank will call you on it. They are going to count the percentage of your gross monthly income (front-end ratio) to put it as payments for the house (taxes and insurance) and other payments like auto or student loans and credit cards. Paying your loans down each month increases the possibility that lenders will lower the total cost of your mortgage.