Posted on: 2 August 2022
There are so many benefits that come along with owning your own home. However, if you are like most people, you will need to secure a home loan before you are able to purchase a home of your own. Thankfully, there are some rather simple steps that you can take in order to help improve your chances of being approved by a home loan lender. Read more to learn more about what you can do to help improve your approval odds.
#1: Deposit Cash Savings Into The Bank
Many people choose to keep at least some cash savings on hand in case of an emergency. While this is not necessarily a bad idea, keeping your extra cash in a personal safe or under your mattress is not going to help you get the home loan you require. This is because many lenders will check the current balance of all your bank accounts when considering your application for a loan. The more money you have in your bank account, the less likely you are to default on your loan. This helps lenders to feel more confident when approving your loan application. Consequently, if you have any cash savings tucked away somewhere, now is the time to deposit that money into your checking or savings account.
#2: Don't Make Any Major Purchases Leading Up To Your Application
Large purchases not only impact how much cash you have on hand, but they can also create the illusion of financial instability when a lender checks your bank accounts. Large purchases that are made using a credit card or other form of financing may also impact your credit score. In order to improve your odds of being approved for a home loan, you will want to avoid any large purchases for at least several months prior to applying for this financing. It is also important to avoid this type of purchase between the time your application is originally approved and when your loan is finalized since lenders will often do one last check before the loan is finalized.
#3: Do Not Close Long-Standing Accounts
It is quite common for people to pay off debt when they are preparing to apply for a home loan. Unfortunately, some of these people will actually end up hurting their credit score in the process because of one common mistake: closing long-standing accounts. While paying off debt is always a good thing, closing your credit accounts after this debt has been paid can have a negative impact on your credit score. This is especially true if the account you are closing is one of your oldest accounts. Consequently, while you may wish to pay off debt when applying for home loans, you should keep your credit accounts open and in good standing whenever possible.Share