6 Tips for Mortgage Application Approval
Are you planning to apply for a mortgage in the near future?
If so, there are steps you can take in advance to increase your chances of getting a YES from the mortgage lender.
- Practice good account conduct. Avoid going into overdraft by accident. This happens when an automatic payment is slightly more than the amount available in your bank account. While this may not involve a large amount of money, it can serve as a red flag for the lender and it can affect your chances of being approved for a mortgage later on.
- Avoid short term debt on consumer goods like TV's, sound systems, expensive cars. If you can’t afford to pay cash right now, consider whether you should be buying it. Things that are on monthly payment plans really do matter in the eyes of the lender. Even if the weekly amounts going out are small. Avoid monthly payment plans if at all possible.
- Income is everything. Most lenders will value regular income over a sizeable savings account. Even though a healthy savings balance potentially puts you in a better position to be able to pay your mortgage on time. Having lots of cash in the bank is great but is no guarantee the lender will approve you for a mortgage.
- Avoid going on vacation if it’s all going on the credit card. Lenders will potentially scour your spending records and look for red flags like excessive credit card spending.
- Job stability helps. The longer you have been with your employer, the better. Keep that in mind if you are thinking of becoming a contractor, or have a scattered job history and are thinking about making another move.
- For self-employed people, taxable income is what matters. Lenders are looking at your income AFTER your expenses so keep that in mind when you are deciding what to claim.
Contact me at amber@ambergw.com if you are thinking about making a move in the near future and I can help you with your mortgage pre-approval.