We all have dreams of owning a big, spacious, and luxury home, but the thought of how to get approved for a higher mortgage loan can weaken us. If you’re struggling to get a higher loan but your lender’s purse is tight, then here are some tips on how to get yourself more attractive to lenders and collect a high mortgage loan.
But before then, let’s look at how banks decide the amount they lend and when is the best time to apply for a mortgage.
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How Lenders Decide How Much to Lend
There are several things that lenders look at when deciding how much to give you. These include, how well they think you’ll be able to pay off your debt, your rate of income, your existing debt and your credit rating. If you’re thinking of how to get a higher mortgage loan, then make sure all your documents and finances are in the right shape to entice your lender.
The Best Time to Apply for a Mortgage Loan
Mortgage rates can rise at any moment. As a home buyer, it’s important to know the best time to pass your mortgage application to your lender. The fact is there’s no general best or worst time to apply for a mortgage, but there are some ‘lucky’ times you might want to consider applying to your lender. Lenders usually have a monthly business cycle which is largely driven by the mortgage loan and payback numbers.
For this, the beginning of the month is mostly considered the best time to start your mortgage application. At this time most lenders are eager to acquire and set up new mortgages. Most loan officers will eagerly return your phone calls and carefully review your documents.
The ending of a month is mostly considered the worst time to apply for a mortgage. Many will be in a rush to apply for loans. Lenders on the other hand are more focused on closing on their existing mortgages to meet their monthly compensation and targets. As such, they won’t have much time to process new loans till the beginning of a new month.
While this is mostly the case, don’t forget that ‘most’ is not ‘all’. You might still get some lenders ready to process your mortgage at any time of the month.
It’s also important to know that the time it takes for you to apply and get approved for a loan depends on how laborious your loan is and how prepared your documents and information are.
Besides grabbing the opportunity of applying at the beginning of a month, here are some tips that will make you get more attention from your lender whenever you process a mortgage:
- Be composed and make sure all the required documents are at your fingertips
- Ensure you submit a complete application so that your lender will be able to pass your information to the underwriter as soon as possible
- Be quick to explain any quirks in your documents and financial history
- Add a few buffer days to your rate lock-in in anticipation of delays.
The problem hindering most potential house buyers from getting their dream home is getting a higher loan. If you’ve been thinking of how to get approved for a higher mortgage loan, then here are five tips for you.
But before that, if you’ve been struggling to make your monthly mortgage payment, check out what Bidens Mortgage Stimulus is all about.
– Pay off Debts
A crucial factor looked at by lenders when assessing your application is how much you’re owing already. Generally, the less debt you’ve, the more you stand chances of getting approved for a mortgage.
If your existing debt is high, consider using your savings to pay it off. Besides making you more attractive to lenders, paying off debt is cost-effective as the interest rate charged per money borrowed is much more than what you earn from saving accounts. However, this doesn’t mean you have to empty your savings account and pay off debts, keep some pennies in case of emergencies.
– Improve Credit Rating
Credit rating or credit score is simply the measurement of your ability to repay mortgage loans based on income, past repay histories, and your credit utilisation. It’s one of the factors that are considered by lenders when deciding whether to lend you money or not. Having a good credit score will make clients willing to give you a higher amount.
You can easily improve your credit rating by paying utility bills on time, having a landline phone, making a big debt payment, keeping a low credit utilization, building a good credit history and monitoring your credit file for any dishonest activities.
– Spend Less
As much as lenders look into your credit score and amount of debt, they also assess how you spend your money. Lenders look into your bills, childcare costs, kids’ educational fees, and lifestyle. So if you want to borrow more money, reduce spending much on unnecessary things. You can use online budget planners to know where your money goes and how to limit spending on necessary things only.
– Close Accounts
Still, thinking of how to get approved for a higher mortgage loan? Then consider closing some of your accounts. Mortgage lenders also consider how much access you’ve to credit. Having a big overdraft and many credit cards can make lenders less keen to lend you a huge amount. To avoid this, close accounts you’re not using or reduce their limits.
Co-sign the Loan With Someone
If your income isn’t enough for you to acquire a mortgage, then the best thing is to find someone who will co-sign that loan with you. A co-signer will also help in improving your credit rating, and also serves as your guarantor in case you experience any problem along the line.
Getting a mortgage is one of the best ways to acquire your dream house. However if your dream house is at auction and you’re wondering if you can buy a house at auction with a mortgage, then there’s the need for you to do research and consult experts as most auctions expect you to purchase in cash.