Buying a home ranks at the top of many Americans to-do list, according to most mortgage lenders in Jackson, TN. Unfortunately, most of the prospective home buyers fail to prepare adequately for the process, and it lowers their chances of success.
Given the high asking prices on homes, mortgages offer a way out for the average buyer. Therefore, it’s important that you understand the factors that underscore your ability to secure a mortgage approval.
Get your finances in order
Your success in making a mortgage application to buy your dream home heavily depends on the state of your finances. Unfortunately, that extends way back in time to track your history as well. You see, a mortgage is a long-term commitment, often reaching between 5 and 30 years.
As such, lenders need to make sure of your money habits before they can let you borrow money from them. They will consider your credit score, income level, debt-to-credit ratio, and credit card payments.
You stand a better chance of success if your score is above 700, have a steady income, and religiously paying your credit card bills on time. Keeping your debt utilization level below 30 percent also increase your chances.
Put up a substantial deposit
A down payment conveys two messages to the mortgage lender. One, your finances are on a solid footing and two, you are committed to the home buying process. A 20 percent deposit not only increases the chances of a pre-qualification but it also entitles you to low-interest rates on the loan.
Given the average lifetime of home loan is about 15 years, this amounts to considerable savings. A small deposit makes it necessary to insure the loan, which saddles you with additional payments every month.
Buying home is a complicated process that needs adequate preparation to get the best results. Keeping your financial history squeaky clean and putting up a substantial deposit increases your chances of success.
