Knowing How To Get Your Texas Mortgage Approved

6 Tips To Get Your Mortgage Approved In Texas

When it comes to getting a mortgage, there are many people who do not know where to start. They will decide to jump into homeownership when they hear about lower prices and dropping interest rates. However, the process of getting a mortgage is different from a car loan or renting an apartment. Any applicants who do not recognize the differences will be disappointed when their applications are declined.

It is important that you learn about mortgages first and see the ways that you can avoid this rejection. Buying a house is very stressful and your anxiety will only increase when you are not prepared. There are some tips that you can use to help get your mortgage approved without any issues.

Know Your Credit Score

Pulling your credit report will take a few minutes and you can easily order your credit score. This is something that a surprising number of potential home buyers never review before they submit their mortgage application. They assume their score is high enough to qualify for the mortgage they want. Many people also never consider the possibility of identity theft. The problem is that credit fraud and a low score can stop your mortgage application very quickly.

Your credit score and credit activity is one of the major factors that lenders look at. A lot of mortgage lenders require a credit score of 680 as the minimum. If your score is below this, lenders will deny your application for a conventional mortgage.

While a high credit score is important, you also need to look out for missed payments and frequent lateness which will stop applications. This is why you need to pay your bills on time, lower any debts you have and stay on top of your credit report. Taking the time to clean up your credit history and fixing any errors is key to a good credit score and successful mortgage application.

Save Your Money

The requirements for getting a mortgage often change and if you think you might want to apply for one in the near future, you need to have cash on hand. When you apply for a mortgage without any cash, you are going to be rejected. Mortgage lenders have become cautious over the years and will no longer approve any zero deposit mortgages. You need to have a down payment.

The minimum down payment will vary depending on the mortgage and other factors. Each lender has its own requirements, but the average is to have a 3.5% down payment. It is better to have more than this if you can. A 20% down payment will reduce the loan amount and will reduce the chances of rejection as well as mortgage insurance. Lenders will generally require this insurance if you do not have 20% equity. Having a higher deposit will reduce the monthly costs of a mortgage.

It is important to note that the down payment is not the only cash expense you have to think about. When you get a mortgage, there are other fees you need to consider such as home inspections, closing costs, title searches, application fees, and credit report fees. Closing costs will generally be 3% to 5% of the mortgage balance and needs to be paid before the deal is sealed.

Stay At Your Job

When you stick with your employer throughout the home buying process, everything will be better. If there is a chance your income or employment status will change, it can delay or stop the mortgage application.

Lenders will approve your loan based on the information that you provide. If you take a low-paying job or quit to become self-employed, you will be throwing a spanner into the works. Lenders will generally re-evaluate your finances to determine if you still qualify.

Pay Down Existing Debt

While you do not have to have a zero balance on your credit cards, the less you own the better. Your existing debts will determine whether you can get a mortgage as well as the amount the lender is happy to provide. All mortgage lenders will look at your debt to income ratio before they approve your application.

If you have a high debt ratio because of credit card debt, the mortgage lender is likely to reject your application or offer a lower loan. This is due to the fact that your monthly debt payments should not be more than 36% of your gross income. However, if you pay down your other debt before you apply, your ratio will be better and you could get a better mortgage rate.

While it is possible to get a mortgage with consumer debt, you should avoid new debt while you are going through the mortgage process. Lenders are going to recheck your credit before closing. Any new debts could stop the mortgage or delay the closing.

Get Pre-Approved

Before you start looking at houses, you should get pre-approved for a mortgage. This is a financially and emotionally responsible move. When you do this, you know what you can spend before you start looking and you can avoid falling in love with a house that you cannot afford.

The process for pre-approval is fairly simple as you have to contact the mortgage lender and submit your personal and financial information. Pre-approvals will generally tell you how much you can afford and the interest rate of the loan. A pre-approval letter will be provided for your records and the funds will be available when the seller accepts your offer. Of course, it might not always be this simple.

Know What You Can Afford

You should never let the mortgage lender dictate the amount you should spend on the loan. Lenders generally determine the pre-approval amount using your credit report and income. However, they will not factor in other costs such as insurance, groceries, and fuel. Instead of buying a property for the full mortgage value, you should be smarter and keep your expense within your means.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!

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