Even though the coronavirus pandemic has had a drastic impact on the U.S. economy and mortgage interest rates remain at an all time low, it is clear that the mortgage rate has not risen to its highest level in years. According to the National Association of Realtors, it’s not surprising that existing-home sales reached their highest point since 2006.
Regardless of this, most home mortgage borkers have increased their underwriting criteria in response to the economic downturn. They are more cautious about lending to people. Even if you meet all the requirements for a mortgage, it might still be difficult to qualify.
Here are four things to do to improve your chances of being approved to buy a new house or refinance an existing mortgage loan.
- Your credit score and your report are available.
- Compare mortgage lenders and shop around
- Reduce your debt
- Do not take on more debt
Review your credit score and make a report
Your credit score is an indicator of your credit health. To get free access your FICO credit score through a service such as Experian , or Discover Scorecard, you can use a free service such as Experian . This is widely used by lenders and may even be available from your bank.
The pandemic has prompted the three national credit agencies to offer one free credit report each week from April 2021 through April 2021. Normally, each bureau can only provide one free credit report every twelve months.
You should look into ways to improve your credit score if you have poor credit. It doesn’t need to be difficult to improve your credit score. These are simple steps to improving your credit score:
- You must pay your bills on time
- Don’t miss past due payments
- Reduce credit card debt
- Maintain a low level of balance
- Correct any mistakes or incorrect information in your credit card report
Compare Mortgage Brokers
Every Beverly Hills Mortgage Broker is unique in the way they handle mortgage applications and how they rate interest rates. While one lender might reject your application, another lender might be willing to finance your home purchase.
You can compare more Beverly Hills mortgage brokers to increase your chances of finding one or two lenders that will work with you. Your chances of getting the best interest rate available will increase.
Repay All Debt If Possible
Your credit score is an indicator of your eligibility for a mortgage. However, another important element is your ratio (DTI). This is the percentage of your gross monthly income that goes towards debt payments.
Most mortgage lenders want your total DTI to stay below 36% and your front-end DTI (which only includes housing costs) to not exceed 28%. Some may exceed these thresholds but the best ratio.
Focus your efforts on credit cards and loans with low balances that are easy to pay off. This will maximize your chances of success. A small decrease in your DTI can make a big difference.
Don’t Try and Take on Any New Debt
Mortgage Brokers and you will both have to make a significant financial commitment to a mortgage loan. It’s normal for them to be sensitive about other debts that might make it more difficult to pay your monthly payments. It’s important to not apply for any other credit accounts once you have your credit score ready.
You should complete the credit card application process six months before you submit your loan request.
Conclusion
Now is a great time to refinance your mortgage loan or buy a house . Even if you don’t have much savings, there are still options for a low-down payment. However, a lower downpayment may lead to private mortgage coverage.
It’s crucial to ensure that you are a qualified applicant for a mortgage loan before you submit your application. To improve your chances of being approved, you should have good credit and no existing debts.
You can improve your credit score by paying off credit cards and other low balance debts.