10 Mortgage Moves That Will Help You Secure Your Loan

With banking regulations being very strict, obtaining a home loan is a difficult task. Here are some tips that will help prepare you for the lending process.

1) Make Sure your Credit Score is accurate.

Your credit score tells a lender a lot about yourself.  Most lenders will not accept a borrower with a credit score under 620. The higher your credit score, the better rates you will qualify for. Check your credit and make sure it is accurate. If there are any problems or inaccuracies, resolve them before you start looking for a mortgage.

2) Be Prepared

Every lender will ask for your last two pay-stubs, W-2’s, income tax returns and bank statements. Having these documents ready and available will help to speed up the process for getting a loan.

3) Know how much you can afford.

Banks are strict when it comes to your debt to income ratios.  Manage your budget and make room for the new expense of your mortgage loan.

4) Shop Around

Rates are important, but borrowers must also consider points, closing costs and different types of loans.  Don’t feel pressured going to the major banks. A mortgage broker has local knowledge of your area and can help by shopping banks for you.

5) Time is of the essence

The clock starts ticking once you submit your mortgage application to the lender.  Make sure to send in any documents required to clear conditions as quickly as possible.  Any delays could jeopardize the purchase or result in the loss of your locked interest rate.

6) Mortgage Approved?  Your credit must stay put until closing.

Just because you are approved does not mean you are ready to close.  Withdrawing money from your bank accounts, missing payments, or applying for new credit could all cause your loan not to close. The best thing you can do in this period is nothing.

7) Consider a shorter-term loan.

With rates at rock bottom, shorter term loans have become more affordable. A 30-year loan with an interest rate of 6 percent could refinance into at 20-year or 15-year loan keeping the monthly mortgage payments close to what they are now. Consider this option even when the short-term loan means slightly higher monthly payment.

8) Be ready to explain any gifts or large deposits.

 Receiving gifts in order to help out with your purchase is generally acceptable as long as you have the right documentation to support it. Banks will require the donor to fill out a gift letter and have a paper trail showing where the money came when it was deposited into your account. Large deposits that cannot be explained and supported with documentation can be a problem.

9) Be persistent

Just because one lender rejects you doesn’t mean all lenders will. Each lender has its own guideline variations for which loans they will accept or reject. Find out the reasons why you were declined. A mortgage broker can help you analyze the reason for the decline and find lenders that might accept your application.

10) Appraisal isn’t high enough? Try again.

If you believe your appraisal came in too low there are some things you can do.  You can’t order a second appraisal or pick which appraiser the lender hires, but you can dispute the first appraisal or apply with a different lender.  Although all appraisals shouldn’t vary drastically, you may get enough of a change to make your loan work.