5 TIPS ON GETTING A MORTGAGE LOAN

Becoming a house owner is one of the greatest milestones in life, but more often than not, a lot of money is required to make this happen. Most times, we do not have all the money, and getting a mortgage loan seems like the best way to go.

 However, not everyone who applies for a mortgage loan goes back home with a check in hand. We have put together some tips to ensure that you end up on the winning side of the bargain. 

 

1. Get your credit report in order

A credit report is a detailed record of an individual's credit history prepared by a credit bureau. This is the first thing that lenders would most likely request for when you apply for a mortgage loan, so you should make sure it is accurate and up-to-date as well. Doing this increases your chances of getting a good deal. You do not want anything that can jeopardize your mortgage acquisition. 

2. Improve Your Credit Score

While a credit report summarizes your history of paying debts and other bills, a credit score is the single number that lenders use to evaluate your credit risk and determine how likely you are to make timely payments to repay a loan. In general, the higher the credit score you have, the better the mortgage rate you can get. 

3. Lower Your Debt-to-Income Ratio

A debt-to-income ratio compares the amount of debt you have with respect to your overall income. It’s calculated by dividing your total recurring monthly debt by your gross monthly income, expressed as a percentage. Lenders look at your debt-to-income ratio to measure your ability to manage the payments you make each month, and to determine how much house you can afford. 

If you have a low debt-to-income ratio, it shows you have a good balance between debt and income. Lenders like to see debt-to-income ratios that are 36% or lower, with no more than 28% of that debt going toward mortgage payments (this is called the “front-end ratio”

4. Make a huge down payment 

One strong way to show that you mean business as far as getting a mortgage is concerned is to make a large down payment. This lowers the loan-to-value ratio, which increases your chances of getting the mortgage of your choice. The ratio is calculated by dividing the mortgage amount by the purchase price of the home. 

When you're deciding your down payment, remember that a 20% or larger down payment will also mean that you won't be subject to a mortgage insurance requirement, which is another way to save more money.

5. Conduct your own research 

Taking out the time to research and increase your knowledge about loans, rates, etc would go a long way in getting the absolute best. Buying a home isn't child's play, and so going into negotiations with little or no information can be your greatest understanding. Adequately equipping yourself with the right knowledge could help you secure a deal with better rates and terms