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The mortgage application process can be fairly complicated. It requires lots of paperwork, and there are a number of factors that can make a difference between acceptance and rejection. While there is nothing you can do to truly guarantee that you will get the mortgage, you can take several steps to help your odds of having your mortgage approved.
Clean Up Your Credit History
When a mortgage lender looks at your application, it looks at a number of factors. But a few of those factors are as important as your credit score. It can determine whether you are eligible for any of the lender's loans, and if you are, what kind of terms you will get. If your credit score isn't bad enough to disqualify you, chances are pretty good that you'll be able to qualify only for loans with high interest rates, high penalties and low overall loan amounts.
Many mortgage applicants assume that there is nothing they can do about it. Fortunately for you, this is not the case. You can order a copy of your credit report from one of the three American credit reporting agencies (Equifax, Experian and TransUnion). The report will contain the financial information used to compile the credit score. Carefully check the report for any errors and, if you find any, notify the credit card reporting agency. It will be a few months before the errors are removed, but once they are, you can apply on better terms.
It should be noted that, because the three credit reporting agencies use different methods of gathering credit, their reports (and the resulting credit scores) are slightly different.
Consider Government Mortgage Programs
Federal, state and municipal governments run a number of programs designed to help people in lower income brackets and/or who have foreclosures and defaults in their credit history to secure mortgages. Because the mortgages are backed by government entities, they have much more flexible, lenient terms than most private mortgages. Depending on your financial situation, programs like this may be your best option. Unfortunately, many home buyers don't look into those programs, either because they think the programs aren't meant for them or because they aren't even aware the programs exist.
You can find out about government mortgage programs by contacting your local housing agencies.
Don't Borrow More than You Can Repay
When you are looking for a mortgage to apply for, your first instinct may be to look for the biggest one available. However, this would be the worst thing you can do. You will have to pay all of this back, something which you may not necessarily be able to afford in the long run. And even if you can, you may not have enough money left over to cover the other costs of home ownership--property taxes, homeowner's insurance, etc.
This is why you should aim for a mortgage that you can repay in twenty years and whose monthly payments don't exceed twenty percent of your monthly income. And once you do take it out, start setting some money aside, just in case your monthly income runs low.
Mortgage applications are long, complicated and filled with legal language that you may not understand. Many home buyers try to make it through it the best they can, not realizing that if they don't understand what they fill out, they are much more likely to make mistakes. In some cases, mere mistakes can result in a loan's being denied. This is why you should go over the application with the mortgage lender and ask the mortgage broker to explain all the confusing parts in plain English.
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