Buying a home is one of the biggest financial commitments you’ll be taking on. For most people, this purchase requires a mortgage. Although there’s really no guarantee that you’ll qualify for a mortgage, there are a few things you can do to boost your odds. Read on for a few easy yet smart hacks that will help you qualify for a mortgage soon.
Check Your Credit Score
The first thing you need to do as a home loan shopper is to check your credit score. This is because an unusually low credit score tells lenders that there’s a high probability they won’t get all their money back if they give you a loan. So, before applying for your mortgage, review your report and fix any errors on it, such as incorrect information or details of accounts that don’t belong to you. If there are even a few negative items on your report, such as late payments or high balances, take steps to improve your credit by making payments on time and paying down debt.
Build up Your Savings
In today’s world, it’s not uncommon for people to have trouble saving money. However, having some reserves in the bank can help show lenders that you’re financially responsible and will be able to pay them back. Remember that you also need to have funds for the down payment. While 20% is standard, the more money you can put down, the better your chances of qualifying for a mortgage will be.
Have a Consistent Employment Record
If you don’t have a regular job, try and find one before applying for a mortgage. Even if you work on contract, it shows that you’re able to land jobs and earn money. If you are self-employed, however, it may be difficult to show that you earn enough money to make mortgage payments, but your tax returns will serve as proof.
Gather Your Paperwork
Another important step when applying for a mortgage is to gather all the paperwork that shows how much money you earn and how much money you spend each month. The most common documents needed are W-2 forms from your employer (if you’re an employee), tax returns from the past two years if you’re self-employed (or if there’s been a significant change in your income since your last tax return), three months’ worth of bank statements, and proof of any other assets such as investments.
