Buying a home is a big event since it is a considerable investment and once in a lifetime opportunity for most people. And more often than not, people require a mortgage to buy a house. The catch is that, just like how it is a considerable amount for the borrowers, it is a huge amount even for the lending institutions. Therefore, loan applications are approved after a lot of due diligence, which takes time. Sometimes, your application might even get rejected due to some small mistake that you might have overlooked.
And a home loan application rejection can affect your credit scores and raise a red flag to the other lenders! Therefore, you can take the following steps to ensure that your application is not rejected and approved instantly!
1. Be aware of your financial condition:
One of the main requirements of any loan is that you must clear your EMIs on time. So, take a close look at your finances and assess whether you have the finances to pay back your loan comfortably. In addition, lenders will have a minimum income level requirement. Make sure that you meet that.
2. Credit Report:
A credit report is a detailed report of your credit history that lenders check to determine whether you qualify for a loan. Your credit score will tell if you have any previous loans due or how good you are with your investments, and how much of the new loan you can repay. So, you need to ensure that all your outstanding debts are cleared, and your credit card bills are all paid. Ensure that all the transactions reflected in the report pertain to you and if there is any incorrect information, get it corrected. This will help you to maintain a good credit score.
3. Debt to income ratio:
This compares your debt with your overall income. Therefore, the lower your debt to income ratio, the more eligible you are for your home mortgage loan. Therefore, to lower the ratio, you need to decrease your debt and increase your income which means you need to keep a close look at your spending habits.
4. Pay a higher down payment:
It is a known fact that the lesser amount you borrow, the lesser you will have to repay. But what you might not know is that by making a higher down payment, you give the impression to the lender that you know how to save money, and therefore they will treat you as a customer who does not pose a considerable risk to them. Therefore, try to make at least 20% of the cost of the property as a down payment. This will work in your favor and increase your mortgage loan eligibility.
5. Pay attention to the application form:
While filling the application form, ensure that you are thorough and read all the clauses in the form carefully. Make sure that all the information that you are providing is correct, as an incorrect form may lead to a rejection!
Now, you know the steps that you can take to ensure that your mortgage loan is instantly approved. Make sure that in addition to the above, you also are prompt in your responses to your lender, and you provide all necessary documents and information as and when asked. And you will see that, though it looks pretty cumbersome, it is pretty easy to follow all these steps!
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