Education and news for smart DIY landlords!
Not all people are born from wealthy families or have jobs with seven-figure salaries that allow quick and in-cash home purchases anytime. There are others who've worked from the bottom and saved up so they can afford a house.
The truth is that some of us face the reality that real estate properties aren’t exactly cheap, which is why we need approval for a mortgage or loan to be able to pay for a home in full. And mortgage approvals aren’t easy to get as well, especially for new borrowers.
But don’t worry. If others were able to own a house through a loan, you too can get one by following the tips listed below.
The first thing lenders do when they determine how qualified you are to be granted a loan is to review your credit report. This contains a detailed history of the borrows you’ve made throughout your life using cards, accounts, and previous loans.
Never let a lender do a review of your credit report first, especially if you’re not confident of having a good record. Get your credit report ASAP through the Federal Trade Commission’s authorized credit report website.
Expect your credit report to have errors and check it thoroughly for mistakes such as debts that are marked unpaid despite being paid in full already or outdated information. These kinds of errors can negatively affect your credit score — a number between 300-850 representing your creditworthiness. The lower your credit score is, the less likely you’ll be approved for a loan.
If there aren’t any errors to fix on your credit report and you indeed have debts to pay, settle them today. Pay overdue debts first. Set reminders for all of your bills so you can pay them on time. Keep your revolving credit and card balances low. Reduce the amount of total debt you owe by lessening your use of credit cards. Pay in cash if possible.
Is your credit card a joint account? If yes, and the person linked is no longer a part of your life, then you need to sever the connection pronto. Even if you’ve done your best to keep your credit score in good standing but the people linked to your account have poor paying habits, their negative credit reputation will still reflect on you.
Ask the mortgage representative/lender to send your application to their colleague for a second opinion if you get rejected for the first time. This might sound too demanding of you as a borrower but you must try every option available.
However, have a really good reason as to why you asked for an exception. Lenders are willing to exempt you if your bad credit score was caused by a one-time event. Prepare the evidence if available and defend your case (sometimes it will be done in the form of a worded letter).
The tips found above are mostly for first-time borrowers such as new parents, bachelors, bachelorettes, and people confident in affording a house loan after renting for so long. There are more ways you can increase your chances of getting approved for a mortgage.
You can get a cosigner, register to vote, pay a bigger down payment, choose a less expensive property, close inactive credit accounts, and cut back on unnecessary spending. Research how to do them effectively. Knowledge improves preparedness which increases opportunities for success.
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