5 Tips to Help You Qualify for a Good Mortgage
by Arnab Dey Real Estate 23 March 2022
Getting a home is a goal that many people have for themselves. But for most people to afford a home, they require a mortgage from a lender of some kind. Unfortunately, it isn’t always easy to qualify for a mortgage.
Plenty of people struggle to qualify at all, and plenty of others can only qualify for mortgages that are questionable at best. However, there are some things you can do to give yourself the best chance of getting a good mortgage.
With that in mind, this article is going to go over a few tips to help you qualify for a good and affordable mortgage.
1. Get Your Credit in a Good Place
One of the most important parts of getting a mortgage is your credit. The higher your credit score, the better a mortgage you will generally be able to get.
A better credit score essentially means you are less risky to loan money to, as you have a long history of successfully paying off your debt.
Before applying for a mortgage, consider getting a copy of your credit report to check and ensure everything looks good. If you see any issues, disputing inaccurate items with DisputeBee is a good option to consider. Finding and correcting errors can lead to a quick and drastic improvement in your credit.
In addition to finding and dealing with errors, it’s a good idea to make lifestyle changes that can help you improve your credit. This includes making your payments in full and on-time, keeping credit utilization low, and keeping old credit accounts open.
2. Work With a Mortgage Broker
Next, you want to consider working with a mortgage broker. These are individuals or companies that act as intermediaries between you and lenders.
They will work on your behalf to seek out the best mortgages from a variety of different sources to find you a good deal and a mortgage that meets your specific needs.
All in all, going with a broker can save you time and money, and help you score a great mortgage, all without having to pay them at all. They receive money from the lenders for bringing them business, not from home buyers like yourself.
Related Resource: The Benefits You Gain From Using A Mortgage Broker
3. Have a Stable Income
When a lender gives you money, they want to be reasonably sure that you will be able to repay it according to the agreed-upon schedule.
A good way to show that you have the ability to repay a loan well is by having a stable income. A predictable amount of money coming in monthly will show lenders how much you have, and what you can afford.
If you have an income that fluctuates often or isn’t very high, it can be a bit worrisome for lenders. If your business takes a hit or commissions are lower than expected, it could hurt your chances with many lenders.
Also, don’t change jobs when looking for a home, either. In most cases, lenders will want to see a stable work history of multiple months at the same place.
4. Pay Down Existing Debt
While having existing debt won’t disqualify you from getting a mortgage, it isn’t really a positive thing. If you have a ton of debt already, many lenders may not want to add even more to it.
The more debt you have to pay each month, the more likely it is that you will be unable to pay for one reason or another.
As a result, consider paying down your existing debt to a manageable amount before applying for a mortgage. This will look better and show that you aren’t relying too much on your credit card. It doesn’t need to be fully gone, but should certainly be easily manageable for your income level.
5. Save a Large Down Payment if Possible
Another great tip to get a better mortgage is to save a large down payment. If a lender sees that a home buyer has some skin in the game and is taking a risk themselves, lenders will see these people as less likely to default.
The less that a lender will need to put towards the purchase of a home, the less risky the overall loan will be, too. Also, it is important to remember that if your down payment is less than 20%, you will likely be on the hook for private mortgage insurance, too. This is just another reason to consider a larger down payment if you can afford it.
By keeping these tips in mind, you can ensure you are able to qualify for a good mortgage.