Transitioning from renter to homeowner is among the foremost tenets of adulthood. However, unless you’re independently wealthy or fortunate enough to have a high-paying career, a mortgage is essential to making your dreams of homeownership a reality. In order to land a decent mortgage, you’ll need to prove yourself financially responsible. Few lenders are willing to task risks on applicants who possess no aptitude for managing money. That being the case, aspiring homeowners would be wise to heed the following pointers before filling out mortgage applications.
Educate Yourself
Before submitting a mortgage application, take care to do your homework. In addition to exploring your lender options, make a point of brushing up on local mortgage rates. Putting in a little bit of effort at this stage can make things considerably easier down the line. Garden State residents who will soon be submitting mortgage applications would do well to learn more about current mortgage rates in NJ.
Pay Down Outstanding Debt
Most Americans live with some level of debt. Between student loans, car loans and credit card payments, it’s easy to see why debt is such big business in the U.S. In addition to being a persistent source of stress for many of us, outstanding debt also stands to sink your chances for mortgage approval. If certain types of debt – i.e., student loans and car loans – are kept under control and routinely paid on time, they shouldn’t impact your approval odds too much. However, if you’re living with massive credit card debt or have defaulted on past loans, your mortgage application may not be in good shape. After all, if you can’t be trusted to keep up with your existing debt payments, why should a loan officer take a chance on you?
With this in mind, make a point of paying down any outstanding debt before submitting your mortgage application. There’s a good chance this will mean waiting a little longer than you’d like to submit your application, but it stands to increase your approval odds exponentially. If you absolutely can’t wait to submit your application, consider asking close friends or family members for a loan.
Don’t Make Large Purchases
Making large purchases right before or during the approval process can be a detriment to your efforts. Large purchases are generally made on credit, and the more credit card debt you have, the less likely your application is to be approved. Not only do large purchases stand to increase your outstanding debt, making them during the application process may indicate a lack of good judgment to loan officers.
In fairness, some large purchases simply can’t be avoided in emergency situations. For example, if you suddenly find yourself in need of major car repairs or experience an unforeseen medical issue, you may have no choice but to break out the old credit card. Again, obtaining a loan from a trusted loved one may prove beneficial in these circumstances. If this isn’t an option, contact your loan officer and explain that the situation constituted an emergency.
Avoid Leaving Your Job
Consistent income is one of the most important factors loan officers take into account during the application process. After all, in the absence of regular income, how can applicants be expected to keep up with mortgage payments? Needless to say, applying for a mortgage while unemployed is likely to result in your application being rejected. As such, it’s generally recommended that you avoid leaving your job during the aforementioned process. Unless circumstances are abusive, unsafe or otherwise untenable, you’d be wise to stick things out until your loan is approved.
Few things are more gratifying than being approved for a mortgage and handed the keys to your first home. While there are a number of good things to be said about renting, homeownership is generally a more attractive option for people who wish to put down roots and/or start families. However, mortgage approval isn’t quite as simple a process as some homeowners make it out to be. Depending on your income level, savings and outstanding debt, obtaining a good mortgage can seem like an uphill battle. Aspiring homeowners looking to increase their chances of being approved for their desired mortgage should put the previously discussed tips to good use.