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Tips to Get Approved for a Home Loan

by pps-DUEditor

It’s not uncommon to hear of people buying homes on a mortgage. However, a number of applications that are made to mortgage lenders get rejected because the applicant does not meet the eligibility requirements. To ensure your mortgage application gets approved, it’s important to know what the mortgage process entails. Here are our tips to help you get approved for a home loan quickly.

  1. Check your credit score: Before you start looking for potential homes to purchase, you should check your credit score. Lenders decide whether to approve your application or not based on the information in your credit report. If you find that your credit score is not that impressive, you may want to hold off on applying for a mortgage right away.
  2. Know your budget: If you apply for a loan amount that is beyond your repayment capacity, the lender may reject your application. So, ensure that you take your current income and total debts into account and work out how much you can afford to borrow. Lenders, ideally, prefer applicants to have a debt-to-income ratio of 40% or lower.
  3. Save up for the down payment: Traditional mortgage lenders will need you to make a down payment of at least 20% of the purchase price of the home. Since this is a substantial sum, you should start saving up for it. You can also consider opting for an FHA loan that requires a lower down payment, if you are on a tight budget.
  4. Research different loans: Next, it’s important to research the different types of home loans that are available and pick the one with the best terms. For instance, if you are a veteran, you may want to apply for a VA home loan program, rather than apply to a commercial bank.
  5. Get pre-approved: Once you find a few loans that seem to have good interest rates, you should apply for pre-approval. Once you are pre-approved for a home loan, you’ll have a clearer understanding of what terms to expect.

During the entire loan approval process, ensure that you keep an eye on your credit and avoid taking new loans or applying for new cards to keep your credit score from taking a dip.

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