Purchasing a new home is a major life milestone and, in today’s hot real estate market, it’s no small feat. There are aspects of house hunting that are fun and rewarding, like browsing listings, attending open houses, and spending your weekends exploring different neighborhoods.
Applying for a mortgage is not one of those things, but approval is an essential step towards homeownership. To make the journey a little bit less stressful, here are some expert tips for mortgage approval.
How to get approved for a mortgage:
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Make sure you have good credit
You might be able to get a car loan or payday loan with bad credit, but (unless you have a huge down payment) obtaining a mortgage will be difficult. Lenders give their best rates to borrowers with credit scores above 760. If you have existing loans or debt it is a good idea to resolve these issues before applying.
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Be able to provide proof of income
A generation ago, proof of income and employment verification were easy. Most people had one job with one company. Today, with the rise of remote work, contract work, and self-employment, things are a bit tougher. If you are among the millions of Americans that work on a contract or freelance basis, be prepared to dig into your records for additional proof.
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Save up money for a down payment
Even with great credit, you will need to provide a substantial down payment to get approved. This down payment lowers your total loan, but it also serves another important function – it shows your lender that you can save thousands of dollars.
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Do your research
Researching the mortgage process is one of the best things you can do for your application. Understanding how mortgages work and what lenders are looking for will help you prepare the right documents and ask the right questions.
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Speak to a reputable mortgage broker
It doesn’t matter how much research you do – with hundreds of thousands of dollars at stake, the mortgage approval process can get complicated. If you are overwhelmed by the process, a qualified mortgage broker can show you how to get approved for a mortgage, help you gather info, and find the best loans for your needs.
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