Simple Actions You Can Take to Boost Your Mortgage Application
Have you ever applied for a mortgage and felt somewhat overwhelmed or maybe a little nervous? We are all trying to avoid the embarrassment of rejection and there’s no doubt that applying for a mortgage can be little more than stressful. The journey of searching and finding the perfect home and then having to go through the loan application process could put your sanity to the test. Luckily, there are a few tips and tricks that can that can ease the stress of applying and also help your application look a little more respectable.
Paying off old debt and working on improving your credit score are important ways to boost your loan application, but there are a few other actions you can take that are a little easier to control. A recently published article from Realtor.com presents us with five major mistakes people make on their mortgage applications and how they can easily be resolved.
Not using your credit cards enough is one mistake that you may have never thought about. Yes, a poor credit score is worse but no credit at all is not much better. Think about it, how will lenders know if you’re trustworthy or not. Paying off those student loans and making rent payments on time does help your minimal credit history, but establishing credit is a key way to make sure your lender can trust you.
Another easily avoidable reason home loans get denied is because you’ve recently opened new credit cards. Opening new credit cards lower your credit and that just might be the tip of the iceberg of home loan rejection. The solution is should be pretty obvious, just don’t open new credit cards right before you apply for a mortgage.
Missing a medical bill may not seem too serious but a lot of times this default can make its way to credit bureaus and stick out on your credit report. If you can’t quite pay your medical bill off right away just talk to your doctor about setting up a payment plan and then mortgage lenders can see that you are in the process of paying it off.
Recently changing your job might not always be avoidable in some situations, however, if it is you might want to wait until after your mortgage gets approved. Lenders are looking for a consistent income therefore changing your job negatively affect your application.
The most obvious, and possibly worst, mistake you could make is lying on your loan applications. Lenders give you a loan if they think you are trustworthy, so lying on you mortgage application may not be your best bet. Even worse, this could lead to mortgage fraud which is a federal offense. Easy solution: just tell the truth.
Unfortunately, these tips don’t always protect you from being denied, and research from the Federal Reserve shows that it happens to about one in every eight loan applicants. As shocking as it might seem, getting rejected “shouldn’t be a surprise” according to Brian Koss, executive vice president at the Mortgage Network Inc. He explains how “your loan officer should have given you a good assessment” as you go through the mortgage application process, so you have some indication as to whether you should qualify or not.
If are denied a loan, it’s not the end of the world. Bruce McClary from the National Foundation for Credit Counseling explains that the lender will show you why you were denied so you can work on resolving things (maybe with a credit counseling agency) and then re-qualify. The important thing to remember is if your mortgage application does get denied, it does not mean you can never get a mortgage.