Ways You May Be Hindering Your Chances of Mortgage Approval
For many first-time homebuyers, purchasing a house without the aid of a mortgage loan simply isn’t feasible. That being the case, getting approved for a manageable mortgage loan should be among every homebuyer’s top priorities. So, if you’ll soon be submitting mortgage loan applications, it’s imperative that you get your ducks in a row beforehand, as you may be hindering your chances of approval without even realizing it. First-time homebuyers who have made any of the following blunders would do well to get a handle on things in advance of applying for a mortgage loan.
You Have a Ton of Outstanding Debt
If you’re currently dealing with a considerable amount of outstanding debt, you shouldn’t be surprised to see mortgage loan applications rejected. After all, there’s little wonder as to why so many lenders are hesitant to take a chance on applicants who are saddled with mountains of debt. If someone is unable to get a handle on existing debt, what reason is there to believe they’ll be able to keep up with monthly mortgage payments? Furthermore, submitting a mortgage loan application when you’re already drowning in debt indicates a distinct lack of financial responsibility to many lenders.
With this in mind, make a point of getting a handle on any outstanding debt in advance of submitting mortgage applications. While this may mean temporarily putting your dream of homeownership on hold, it will ultimately increase your chances of making this dream a reality. Paying down existing debt – or paying it off entirely – before entering into a mortgage agreement can lift a tremendous weight off your shoulders, thus enabling you to become a financially unburdened homeowner. Old North State-based homebuyers interested in Charlotte, NC real estate should make a point of taking control of outstanding debt before proceeding to submit loan applications.
You Lack Consistent Income
Even if you don’t have a ton of outstanding debt, a lack of consistent income can effectively tank your chances of mortgage loan approval. In order for you to be approved for a home loan, lenders need to know that you’ll be able to keep up with monthly mortgage payments, and a lack of income is unlikely to instill confidence in them. So, if you currently lack consistent income – or income of any sort – you’d do well to hold off on submitting loan applications until the situation changes. Furthermore, if your current income is insufficient, consider enlisting the aid of a cosigner.
By the same token, it’s generally a good idea to avoid quitting your job during the loan application process. So, unless you’re dealing with a work situation that’s outright abusive or damaging to your mental health, try to stick with it for the time being. However, if you intend to quit your current job and have a similar-paying position lined up, make this clear to lenders at the outset.
You Keep Adding to Your Debt
As previously stated, copious amounts of outstanding debt can diminish your chances of mortgage loan approval. So, in addition to getting outstanding debt under control, you’ll also need to avoid adding to that debt. This means putting a hold on making large purchases on credit in the leadup to submitting loan applications and throughout the entirety of the application review process.
Outside of emergency situations, avoid making large purchases while your application is under review. At the very least, you should avoid making such purchases on credit. If large purchases absolutely must be made and you don’t have the capital on hand, consider asking a close friend or family member for a short-term loan.
You’re Applying for Mortgage Loans You Can’t Reasonably Afford
No matter how keen you are on becoming a homeowner, you should abstain from applying for mortgage loans you can’t reasonably afford. For one thing, this is likely to be a waste of everyone’s time, as such applications are almost certain to be denied. Secondly, on the off-chance that your application is approved, being stuck with a home loan you can’t comfortably afford will prove immensely stressful and financially draining.
Also Read: Using an Online Mortgage Calculator to Figure Out Your Monthly Payments
Unless you’re independently wealthy or sitting on an enormous nest egg, purchasing your first home is likely to require the aid of a mortgage loan. Suffice it to say, in the absence of such a loan, your dreams of homeownership are practically guaranteed to go unrealized. Unfortunately, without even realizing it, many first-time homebuyers effectively tank their chances at loan approval. To help ensure that you don’t inadvertently mess things up for yourself on the mortgage front, take care to avoid the previously discussed missteps.
Pranab Bhandari is an Editor of the Financial Blog “Financebuzz”. Apart from writing informative financial articles for his blog, he is a regular contributor to many national and international publications namely Tweak Your Biz, Growth Rocks ETC.
