It takes a lot of mental and financial courage to buy a home or an investment property. There has to be a lot of research about the local market and attending of auctions and inspections and other preparations involved. And when I say ‘prepare,’ you genuinely need to – get your finances into shape to win over any lender or broker you desire.
Remember, lenders want a deeper insight into an individual’s financial situation and are full of critical judgment when trusting in anyone. They want to know how capable you are of repaying the loan and the extent of risk you pose to them. So, they assess your current cash/equity status. And, if they consider you to be a high-risk borrower, you are charged with higher interest or, at times, knocked back altogether.
To ensure an unhesitant mortgage approval, here is a list of things that you must fix –
- Credit History
Your credit score plays a vital role in your application processing. It helps the lender understand how diligent you have been with the payment of loans, card bills, and other liabilities in the past. The higher your score is, the better are your chances of getting a go-ahead as a first-time homebuyer.
So, keep a close eye on your credit score and improve it with all possible means before applying for the loan. Don’t miss any due payments and limit how often you apply for new accounts.
- Income Source
Your monthly income is another crucial part of your financial profile, as it directly affects your ability to repay the residential mortgage. However, the minimum income requirement may differ as per your city and the lender you have chosen. Only when you meet the set criteria, you get a home loan with ease.
Hence, calculate the finances you have at your disposal. Also, take into account your additional sources of income to assure lenders of your credibility.
- Employment Status
It is needless to say that income comes from employment, and mortgage lenders want good stability there. If mortgage lenders find that your work situation is dicey and you could lose your job or business any moment, the chances of mortgage approval become questionable.
Thus, find a reliable means of employment and then use it to prove your creditworthiness in front of lenders or lending institutions.
- Current Debt Obligations
Individuals with too many financial commitments are trusted less by lenders, especially when unpaid or due. Mortgage inspectors pay special attention to older repayment patterns of applicants and raise a red flag over late or missing EMIs.
Therefore, be disciplined with your credit repayment to get a loan sanction on the amount you want and for interest rates that are nominal.
- Collateral Security
For many of you, there can be a lot of factors working against your qualification status. It can be a low credit score, limited income, or a record of constant job changes. In these cases, lenders would not want to lend you, and you might need to use collateral security to qualify.
The lender will seize that security if you don’t pay what you owe and sell it to cover his costs.