Lots of people apply to get their home mortgage approved every year, but not everybody gets it. There are many reasons why so many of them gets rejected for a home mortgage. You should consider the following tips so that the chance of you getting rejected is reduced.
Reduce usage of your credit card
You should make sure that your credit card usage doesn’t exceed 40% of your balance. Banks want to see that you are a responsible borrower. You should pay off your credit card amount as much as possible. It increases the chances of you getting a mortgage.
Limit applying to too many banks
If you apply to too many banks for your mortgage your credit card company will question you. This may lower your credit points so that you will have a bad credit card report.
You should be prepared to pay 20% down payment
Most banks want you to have a credit score of minimum 580. You should pay at least 20% down payment. So, you need to have that 20% money in your savings. If you don’t have it, you can look for new home buyer loans or other options.
It is recommended that you get your preapproval letter before shopping for a mortgage. For this letter, you may have to provide lots of documentation to your bank. You also need to run your credit score. But this letter will help you to know how much you will be able to borrow from the bank and how much down payment you require to pay.
Getting a mortgage is the first step in owning a house. The hardest part is to make sure that you pay the monthly installments on time so that over time you can own the house.