Because of incredibly low interest rates and a rising property market, many Americans are now rushing to buy their dream home. It may be the best time to invest in a new property, but what would you do if you can’t qualify for the mortgage you need?
Don’t let the opportunity to buy great real estate pass. If lenders aren’t giving you the time of day, here are a few steps that may help:
1. Fix your credit score
The most important factor when applying for a mortgage, a good credit score will make your application much easier. You can secure a more competitive interest rate. Get a copy of your credit report and see if there are adjustments needed. Don’t open too many new accounts, and always pay bills on time.
2. Reduce other debts
Lenders see a high debt-to-income ratio as a major red flag, as it implies that you will have trouble keeping up with mortgage payments. To improve your chances of qualifying, the loan professionals of City Creek Mortgage suggest taking care of your car debt, student loans, and other financial obligations first.
3. Look into different mortgage types
Some loans in Utah are easier to qualify for than others are. For instance, VA, FHA, and USDA loans tend to be more lenient with their income-to-debt requirements. If you have been struggling to get a conventional mortgage, consider the various alternatives instead.
4. Save for a larger down payment
While this can be difficult to do with a lower income, nothing helps speed up a mortgage application like having a decent down payment. As lending professionals say, 20% is preferable, but even 10% of the home’s value makes a difference. It can be hard to qualify for a larger mortgage these days if you can’t demonstrate an ability to save.
These steps will help you secure a bigger mortgage, but don’t go overboard. Make sure that you can still keep up with the monthly payments.