For many people, owning their own house is something that they dream of doing. It could be their ultimate goal. However, ever since the economic downturn and housing crash of 2008 to 2009, getting a mortgage has been much harder than ever before. It is not impossible, though; now that the economy is stabilizing there are more lenders willing to give a mortgage to those who require one. You do need to have certain measures in place before you can be approved; here are some of the main ones.
The Right Monthly Income
When applying for a mortgage, you will need to show what your annual income is and what all your outgoings are. You’ll need to provide pay stubs to the lender as proof of the amount of money you make each week or month. If your employer doesn’t give out pay stubs, then they should try a pay stub creator (they should give out pay stubs so they and their employees can keep accurate records. It may also be law in your state, so it is a good idea to check).
If you’re self-employed and don’t have any pay stubs, then you will need to submit recent tax returns instead. Each lender will have their own criteria, so find out what is required and submit it all as quickly as you can to avoid any delay.
Having a good credit score and – perhaps more importantly – a good credit history is essential if you want to be approved for a mortgage. A lender is going to want to be sure that you are able to pay back the mortgage and if you have had issues in the past with credit, then they may be wary.
Check your own credit score online and make sure that it all is right before you start the mortgage application process. If it is lower than required, then you can work on improving it before you start looking at homes to move into and speaking to lenders. You should also check to make sure there are no errors on your credit file that might be lowering your score through no fault of your own. If this is the case, then you will need to ensure that these errors are fixed to repair your score.
The down payment on a property is the biggest upfront expense you’ll need to pay out when you are applying for a mortgage. Most mortgage lenders will ask for at least ten percent of the property value, and some will ask for more depending on your credit score (if you have poor credit they may be able to lend you the money in return for a higher down payment, for example). The more you can pay upfront the smaller your mortgage will be, and that can save you many thousands of dollars in interest on the life of the loan. If you put down 20 percent or more, you won’t have to also buy private mortgage insurance which is extremely expensive.