Make Your Mortgage Approval Process Smooth and Stress-Free
We know that buying a house is a stressful process. The mortgage approval process is almost always stressful, and we believe that preparation is the best way to a successful mortgage application.
Whether you’ve done it before or not, here are some tips on how to make your mortgage approval process as easy as possible.
Review your credit
Your credit can affect your entire homebuying process. So, it’s important that you look over your credit early on in the process and plan accordingly. The first thing a lender will look at when you apply for a loan is your FICO score. The minimum credit score you’ll need to get approved for a loan is based on what type of loan you qualify for.
If you have bad credit, never fear. Here are some factors that can make up for having bad credit:
- Low loan-to-value ratio
- Large amount of money in savings
- High income
- Low debit-to-income ratio
- Long employment history with current employer
To learn more about the 6 different types of loan you can apply for, click here.
Plan your Budget
A home budget makes up what you can afford. This includes list price, fees and insurance costs. It’s a good idea to set a clear budget at the beginning of the mortgage approval process to avoid needless stress. It’s helpful to start tracking your monthly finances: monthly income/monthly debts. After assigning your budget, be honest with yourself and make sure that you can comfortably afford said budget.
Do your research on the mortgage approval process
If you’re a first-time home buyer, the process of getting approved for a mortgage can be extremely confusing and frustrating. We highly suggest that when going through the process, if you’re unsure of anything, the answer is Google. You can find the answer to any of your mortgage approval questions on the internet through videos and articles. But we’re outlining the basics for you here.
- Financial self-assessment and preparation: You’ll do this before you begin your home search. This is a chance to outline your credit, savings, debts, and a budget. You’ll also want to take this time to prepare the documentation necessary to apply for a loan.
- Applying for a loan: Submit your application to a lender and wait to potentially get prequalified.
- Mortgage origination and processing: This is the step when your loan file is put together. This combines your completed application and separate required documents/info. You can also obtain a conditional approval for the loan, which happens when the lender has received all paperwork, but they want you to satisfy loan conditions before actual approval.
- The underwriting process: An underwriter reviews your application to assess and measure risk for repayment. Sometimes an underwriter can review your file upfront and give you conditional approval.
- Satisfying loan conditions: Loan conditions are like a to-do list in order for the buyer to get approval. Going from conditional approval to regular approval, requires you to complete the tasks on the list.
Consider getting a Cosigner
If you end up coming to the conclusion that your credit and income aren’t enough to get you approved, consider finding a cosigner to go in with you. The consigner doesn’t have to live in the house for this to work or even pay part of the loan. This is just a third party whose income will be taken into consideration along with yours. Once a cosigner signs the loan documents, they are liable to pay a part to the full amount of debt accumulated if you don’t make your payments.