How can you ensure you secure a mortgage approval?
You have decided to enter the housing market and purchase a home. This is an exciting experience, and one you will want to look back on positively! Of course, buying a home can be stressful, and a lot of anxiety stems from securing your mortgage approval. This is the biggest step of the process, as it means you can officially close the sale on your new property with your mortgage financing in hand. Is there anything you can do ahead of time to ensure you are approved for a mortgage? There are lots of ways to improve your application, which will encourage lenders to finance your mortgage. Here are some tips to help you put together a strong application!
Improve your credit score
Your credit score will certainly play a role in influencing your mortgage approval. Credit scores examine your payment history, utilization, length of history, and any loans you may have. Your score is meant to indicate your creditworthiness as a borrower, which lenders will want to examine. The higher your score, the more confidence lenders will have in your ability to make mortgage payments. According to Equifax, scores above 660 are considered good, meaning you should aim to boost your score above this number.
To raise your score, you can do a couple of things. First, and most important, is to make your payments on time, and to contribute at least the minimum amount to outstanding debt every month. This consistency will add some stability to your credit habits and will have a positive impact on your score. If you have any old accounts, keep them open instead of shutting them down. Even if you don’t use them, they show you have a history of credit usage. Finally, try to be smart about how much credit you use. Using too much credit indicates you may not have the ability to support another loan. On the other hand, lack of use can make it trickier to produce an accurate report. In general, using up to 40 per cent of your credit is a good balance!
Don’t switch jobs
Unsurprisingly, your employment plays a big part in your mortgage approval as well. Lenders want to know they are providing financing to someone who has the money to pay them back. Of course, our income primarily comes from our jobs! It’s best to maintain steady employment throughout the home buying process. If you take a new job part way through purchasing a home, lenders are more likely to hesitate before granting you a mortgage. This is because a new job often comes with a probationary period, and lenders might worry about your job stability during this time. If you can hold onto your current position for now, it will boost your chances of securing the mortgage you need!
Get pre-qualified
A pre-qualification is another important part of your future mortgage approval. A pre-qualification technically isn’t a necessary step, but it provides borrowers with a huge amount of information and confidence. As you might already know, this process gives a potential lender the chance to review your current financial situation. Based on this information, they can give you an estimate of the mortgage financing you might qualify for come approval time. Of course, this isn’t an official approval, and it does not mean you can take your foot off the gas. However, it does tell you where you can make improvements to strengthen your application, and where you stand in the market. This gives you a chance to make your application as perfect as possible, which will of course help you stand out to lenders.
Work with a mortgage broker!
Finally, the most important part of securing that mortgage approval is reaching out to a mortgage broker. Your broker is your key to accessing the right lenders, and therefore the right products that will work for you. Many lenders exclusively work with borrowers who come through a broker, and brokers have access to lenders and products that you may not have on your own. If you do all the right things in terms of getting your credit score in check, clearing out your debts, and putting together a great application, use a broker to help you cross the finish line! It doesn’t cost you anything to take advantage of a broker’s services, but it can cost you if you don’t.
Getting that final mortgage approval is a fantastic feeling. It means you have successfully navigated all the tricky parts of the housing market and can get ready to become the new owner of your dream home. If buying a house is something you would like to pursue, contacting a mortgage broker is a great place to start. We can help evaluate your situation and buying goals, and find the perfect mortgage product for you!
If you have any questions about your mortgage, get in touch with me!