If you’re an aspiring homeowner, then you probably understand how challenging it is to qualify for a mortgage. Many lenders have introduced stringent measures in an effort to cushion themselves from the economic uncertainty brought about by the pandemic. Despite interest rates being at a record low, borrowers are still struggling to get their mortgages approved.
However, there are several tips you can follow to get your mortgage application approved without too much hassle. For starters, you need to find a quality lender, who you will feel comfortable with leaving the process in their hands. In fact, for our Canadian readers, you can get remarkably affordable mortgages from Altrua. Regardless, whether you’d like to get a second mortgage, lower your rate or simply recalculate payments, there are many lenders in your area where you can go to find a good rate.
So, what do you look for when choosing a mortgage lender? These five areas stand out above all others:
- Experience: Ideally, your preferred lender should have more than 10 years of experience in mortgages. They should also be licensed by all the relevant financial regulatory bodies.
- Low interest rates: Ensure you get a mortgage lender that provides affordable interest rates to customers.
- Flexible terms: When it comes to monthly repayments, your choice mortgage lender should be flexible enough to listen to your proposal and reach a favorable consensus.
- Impeccable customer service: Apart from providing a variety of financial solutions, a good mortgage lender should have a responsive customer service team that offers exquisite services and expert advice.
So what can you do to have a better chance of getting a mortgage approved this coming year? Here are five suggestions that will help you secure that mortgage to better your financial life.
Five Suggestions for Getting a Mortgage Approved in 2021
Maintain a good credit score
Whenever you apply for any type of loan, your lender will check your credit score and possibly go through your credit history. As such, it’s important to keep your credit score in check when applying for a mortgage loan. Having a consistently good credit score will dramatically boost your chances of getting your mortgage approved.
Avoid racking up too much debt or defaulting on mandatory bill payments. More importantly, ensure you spend within your means in the months leading to your mortgage application.
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Find a trustworthy lender
Today, more people are applying for mortgages than ever before. This trend has provided lenders with booming business, resulting in stiff competition within the lending industry. However, increased demand for mortgage loans has also attracted rogue lenders who offer seemingly alluring terms and conditions for their loans. As soon as you deposit your down payment, these fraudsters will go missing without a trace.
You can avoid falling into such snares by conducting ample research to identify a list of reliable lenders. The company you choose should be licensed, experienced and have an impeccable track record.
Get stable streams of revenue
You’ll have a better chance of getting your mortgage approved if you have one or more sources of income. Revenue streams can be generated in a myriad of ways. The most popular method of earning a consistent income is through white-collar employment. If you have a stable job that provides enough salary, you can slowly save up for your down-payment.
If your main job doesn’t provide enough income, consider getting more shifts or investing your savings wisely to grow your wealth. You may even have to get a second job or a side hustle that brings in more income. Steady earnings, even over several months, can significantly boost your chances of securing a mortgage loan.
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Compare different mortgage lenders
It’s important to shop around before settling on a specific mortgage lender. Compare their interest rates, underwriting conditions and more to get one that suits you perfectly. Some lenders provide strict loan terms while others have more lenient requirements.
Although your mortgage application may be rejected by a few financiers, there are numerous mortgage lenders who would be willing to approve your mortgage. As you compare different lenders, you should also consider their experience and track record. Ensure you choose a lender that charges relatively low interest rates.
Maintain a low debt-to-income ratio
To improve your chances of qualifying for a mortgage, ensure that you maintain a low debt-to-income (DTI) ratio. This is simply the fraction of your gross income that is channeled towards paying debts. Your total DTI should be below 36%.
In addition, you should avoid accruing new debt at all costs. Lenders are extremely sensitive to debt. According to them, you might struggle paying your monthly mortgage instalments if you possess too much debt. Ensure you pay off as much debt as possible before applying for a mortgage loan. This will effectively lower your DTI and make it easier to get your mortgage approved.
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In conclusion, when followed, these tips will improve your chances of getting a mortgage approval in 2021. It may take you some time to work through these issues before you can get the mortgage you want. So don’t rush into it. It will be worth the time you’ve taken to get the best mortgage possible, one that will improve your financial life.
Leave a Comment or Answer a Question Below: Are you looking to secure a mortgage or refinance in 2021? What is the biggest obstacle that is holding you back? Have you ever had a second job or side hustle that brought in additional money for a time? If so, how did that work out for you?
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