Apart from being the biggest investment most individuals make in their life, buying a home may also be the biggest commitment anyone can make as they need to make timely mortgage payments or risk losing their home. But if you think that paying back your home loan is the most challenging part of buying a home, you’ll be surprised to learn that getting approved for the mortgage is, in fact, trickier.

Lenders are very picky when it comes to who they approved for a mortgage. But that doesn’t mean you cannot do anything to improve your chances. Here, we share some tips on how you can increase your chances of approval for a mortgage:

Watch Your Credit Score

One of the biggest considerations a lender takes into account when assessing the creditworthiness of a borrower is their credit score. This is something that you should be mindful of if you are planning to buy a home. There’s also the added benefit of getting better interest rates if you have a high credit score. To know more about your credit score, you can request reports from credit rating agencies so you can see whether you need to make some changes to get the ideal score.

Correct Mistakes in Your Report

If you do find any mistakes on your credit score, you can connect with the credit rating agency to correct them. While this does not usually happen, due errors in credit reports do occur sometimes so you must make sure that yours are accurate.

Here are some things to watch out for:

• Debts that you have already paid but are still showing as active on the report
• Loans you have not applied for
• Wrong credentials in the credit report
• Outdated information
• Inaccurate notations for a closed account

There are other mistakes to watch out for, of course, but these are the most common ones. You should be meticulous with your credit report to ensure it’s error-free.

Work on Improving Your Credit Score

If your credit score is too low to get approved, the natural thing to do is to work to improve it. The good news is you can rectify this problem, though it would take you some time. A credit rating agency checks five criteria:

• Payment history
• Owed amount
• Length of credit history
• Credit mix
• New credit

The first two make up about 70% of your score, so if you want to improve your score faster, you can focus on improving those two.

Save Money for a Bigger Down Payment

Mortgage lenders prefer applicants who can make a sizable down payment. Yes, it’s true that some get a loan with only 3% down payment from some lenders. But you should know that those come with sky-high interest rates. It’s also likely that they get approved with such a low down payment because they have a stellar credit score.

It would be better for you to start saving so you can make a large down payment as this increases your chances of getting approved significantly.

Work on Keeping Your Debt Low

People with low debt have a higher chance of approval compared to others who are neck-deep in debt. Obviously, a high debt would impact your debt-to-income ratio – one of the biggest criteria lenders check when judging a borrower’s profile. No matter how good your salary looks, if your debt-to-income ratio is quite high, you’ll find it difficult to get approved. So before applying for a mortgage, it’s recommended that you work on your outstanding obligations first.

Conclusion

Improving your chances of getting a mortgage is an important step to take if you are looking to purchase a home. It is important to ensure that you have a good credit score, and an accurate report. You should work on improving your credit score to prove to the lender that you are a reliable borrower. It is also important to have a good down payment, as this will help to reduce the amount of money you need to borrow and will show the lender that you are financially responsible. You can also speak with home loan consultants to better understand how you can be an ideal borrower to increase your chances of getting approved for a mortgage.

Contact Your Trusted Mortgage Specialist Today!

Mortgage Consultants Group is a mortgage company in Sacramento County that offers flexible financing solutions to clients looking for a new home. Whether you are a first time home buyer or looking to refinance, we can help you get the financing solution that you need. Get in touch with our home loan consultants today at (916) 669-1682!

Are you looking to buy a new home and wondering how much mortgage you can afford? You’re not alone. Deciding how much you can afford to spend on a new home is an important decision that shouldn’t be taken lightly. Fortunately, there are a few simple steps you can take to help you determine how much mortgage you can afford.

In general, most people looking to purchase a home can afford to finance a mortgage of approximately two to two-and-a-half times their yearly income. With this formula, an individual earning $100,000 annually can acquire a mortgage of up to $250,000. This number is not set in stone, but it can help determine what kind of loan is feasible.

How Do Lenders Determine Mortgage Loan Amounts?

Lenders typically look at your debt-to-income ratio when deciding how much mortgage you can afford. This ratio is calculated by taking your total monthly debt payments (including your mortgage) and dividing it by your gross monthly income. It is important to remember that lenders will often look at your total debt-to-income ratio, not just your mortgage payments.

In addition to your debt-to-income ratio, lenders will also consider your credit score and history when determining how much mortgage you can afford. Generally speaking, the higher your credit score, the higher the loan amount you may qualify for.

Finally, lenders will also take into account your down payment when determining how much mortgage you can afford. The larger your down payment, the more likely you are to qualify for a larger loan amount.

Additional Costs to Consider When Shopping For a Home

When shopping for a home, there are additional costs beyond your mortgage. These costs can include closing costs, property taxes, insurance, and home maintenance. It is important to budget for these costs when determining how much mortgage you can afford.

Closing costs are the fees associated with the purchase of a home. These fees typically include appraisal fees, title insurance, attorney fees, and more.

Property taxes are taxes paid to the local government to own a home. The amount of property taxes you will pay will depend on the value of your home and the local tax rates.

Insurance is another cost to consider when buying a home. Homeowner’s insurance can help to protect you from potential losses due to theft, fire, or other disasters.

Finally, home maintenance is an ongoing cost associated with owning a home. This can include things such as repairs, landscaping, and general upkeep. It is important to budget for these costs when determining how much mortgage you can afford.

To Sum Up

In conclusion, determining how much mortgage you can afford is a very important step to take when considering purchasing a home. By taking into account your current financial situation, including your income and debts, as well as other factors, such as the size and location of the home you’re interested in, you can better understand your financial capabilities and make an informed decision. With the right research and planning, you can confidently approach the home-buying process, knowing you are making the best decision for your financial future.

Contact Your Trusted Mortgage Specialist Now!

Buy a home in California today with our help here at Mortgage Consultants Group. We have been making homebuyers’ and homeowners’ dreams come true with flexible financing for every need. Get in touch with us today at (916) 669-1682 to get started.

Home buying is a critical step in many people’s lives, but the buying process can be confusing for first-time homebuyers. There are steps to take before, during, and after you secure your home that will lead you towards success and make the home buying process more manageable.

Before Buying a Home: What to Consider

You may be eager to purchase your home, but first, you should determine the type of housing you want, how much a lender will give you, and your financial circumstances. 

1. The Type of Housing. There are more options for housing than you might think, such as:

• A single-family home
• Duplex
• Fixer-upper property
• Townhome
• Condominium

The option you choose depends on your lifestyle and the number of people in your home. Are you looking for something move-in ready or a less expensive fixer-upper you can invest in restoring? You also should think about the layout of your home and browse real estate listings to get an idea of what you like and dislike. 

2. Mortgage Qualifications. Explore your qualifications and options as mortgage companies may offer different loan amounts and types. Some opt for a 15-year loan, while most buyers choose a 30-year mortgage with a fixed rate. Mortgage Consultants Group can help you understand your options, such as:

• Conventional Mortgages- Can offer interest rates as low as 3% 
• Federal Housing Administration (FHA) Loans- Down payments can be as low as 3.5% of the home’s price
• United States Department of Agriculture (USDA) Loans- Homebuyers in rural areas qualify for these loans, usually with no down payment.
• VA Loans- Veteran and current military members often pay no down payment on these loans.

3. Affordability. Credit score and price range are critical factors when considering a home to purchase. You will need more money than just the monthly payment on your mortgage. Other expenses for your new home might include closing costs, inspections, furnishings, transportation for moving your things, and more. 

Buying Your First Home

Home buying includes finding an established real estate agent, negotiating with your seller, purchasing homeowners insurance, and scheduling a home inspection. The general timeline of the process follows:

• Finding the right home for you
• Assessing and securing your finances 
• Choosing an approved mortgage lender
• Putting in an offer and completing a home inspection
• Closing on the house and moving in

After Purchasing Your Home: What to Do Next

Once you have secured your home through a real estate agent, the planning does not stop there. You should be mindful of your finances and put proper care into your home. The value of your home may increase, but it is your choice when and if you want to sell someday. Keeping an emergency fund is a smart way to prepare for unexpected expenses or circumstances.

Work with Mortgage Consultants Group for Financing Options

At Mortgage Consultants Group, we can help you determine the best choices for loan programs and monthly mortgage payments. We are home loan and mortgage experts, ready to help no matter where you are in the homeowning process. Call (916) 669-1682 for home buying assistance!