One key factor that many mortgage lenders look for is the credit scores and reports of the applicant. Raising your credit score from a three major credit bureaus is vital. It greatly affects the possibility of your applications success, so be sure to look into it.
To increase your chance in having a successful lending application, be sure to identify a realistic budget that you can possible have for this loan. Identifying your budget is important because many lenders uses it as their basis if they will consider your application or not.
Most of the mortgage lenders uses certain rules in which your budget plays a crucial role. One rule that most of the lenders follow is the 28/36 rule. This rule prohibits applicants which monthly payments for this loan exceeds 28% of their gross income, or applicants who's total revolving debts payments, monthly payments including other loans, exceeds 36% of their gross income.
Knowing the type of loan and the duration you wanted to pay for it is important. It does not only help you identify your budget accurately but you can also save some of your money if you choose the right option. You should know that each loan options has its own pros and cons, and before you apply for a mortgage be sure to weigh them carefully.
Handling your other debts before engaging into a new one does not only save you from some rules that most lenders use, but it also makes your financial status look better for the bank and other lending instuition.
Another helpful act that might increase your success rate in your mortgage loan application is by avoiding spending too much. Try your best to limit your purchases even after your application has been approved. It is because even after your application has been approved, lenders still track your financial activities and credits score. Even frequent small purchases may still affect your credit score, which might lead into unfavorable outcome. So it would be much wiser if you wait for your mortgage funds to be released before making unnecessary expenses.