Posted on: 1 March 2017
First time home buying is a goal that many young people share. Buying a home for the first time can be an intimidating process, especially if you unfamiliar with the criteria used by mortgage lenders when deciding whether or not to approve a loan application.
If you are looking for some simple ways to streamline the application process for your first home loan, here are three tips that you should keep in mind.
1. Be familiar with your credit status.
Your credit status will play a key role in determining your eligibility for a home loan. While many first-time buyers believe that they will be approved as long as they haven't been late on installment payments in the past, credit status includes more than just the timeliness of previous payments.
In addition to keeping your accounts current, you should try to keep the ratio of your used-to-available debt low. Maxing out your credit cards can signal poor spending habits, which might cause a mortgage company to reject your application.
Be sure that you have an understanding of your credit status before you apply for your first home loan, and take any steps required to improve your credit status before sending in your application to increase your odds of being approved.
2. Know how you spend your money.
Since a mortgage loan represents a long-term financial agreement between you and the lender, mortgage companies want to see that you have established responsible spending habits. It can be beneficial to track your spending for a few months prior to sending in an application for your first home loan.
If you find that you spend a lot of money on frivolous items, but you don't invest a lot of money into savings or retirement accounts, you will need to change these spending habits prior to receiving a home loan. Responsible spending habits now bode well for long-term financial health, making you a more attractive loan recipient for a mortgage company.
3. Make sure you can document your earnings.
With more and more people making the choice to become self-employed, the importance of documentation has increased when applying for a mortgage. Qualifying for a first-time home loan requires that you are able to prove exactly how much money you are earning.
Take the time to gather your tax returns, income reports, and any applicable receipts prior to applying for your first mortgage so that you will be able to assure the lender that you are earning enough money to pay a monthly mortgage.
When you take the time to prepare for qualification prior to applying for your first mortgage, you can increase your chances of being approved without delay or difficulty.Share