Tips For A Better Financial Standing – How To Increase Your Chances Of Mortgage Approval
Mortgage applications are often denied for a variety of reasons. Your credit score, your debt-to-income ratio, and the type of loan you’re seeking are all elements that specify whether or not your mortgage application will be accepted.
But what can you do to increase your chances of getting approved? In this blog post, Orange Mortgage will break down why mortgage applications are denied in Dallas, TX, and we’ll offer some tips on how to improve your financial standing.
So, whether you’re preparing to apply for a mortgage or have just been denied one, keep reading for helpful advice!
Tip # 1: Maintain a Good Credit Score:
Your credit score is significant in determining whether or not your mortgage application will be approved. Lenders prefer to see a strong credit history, and they’ll use your credit score as a needle of your ability to repay a loan.
If you’re not sure what your credit score is, you can check for free on Credit Karma or AnnualCreditReport.com.
How To Improve Your Credit Score?
1. Pay Your Bills on Time:
Your bill payment history makes up 35% of your credit score, so making payments on time is essential to boosting your score.
2. Keep Your Credit Utilization Low:
Credit utilization means the debt you have compared to your credit limit. For example, if you have a $1000 credit limit and carry a balance of $500, your credit utilization would be 50%. Ideally, it would help to aim for a credit utilization below 30%.
3. Maintain A Mix of Credit:
A mix of credit accounts is preferable (i.e., credit cards, auto loans, student loans, etc.). It is also a great chance to demonstrate that you can handle diverse sorts of debt responsibly.
Tip # 2: Keep Your Debt Low:
When reviewing your mortgage application, your debt-to-income ratio is another important factor that lenders consider. This ratio is calculated by dividing your monthly debt payments by monthly income.
For example, if you have a monthly income of $3000 and pay $600 in debts each month, your debt-to-income ratio would be 20%.
Lenders typically prefer a debt-to-income ratio of 36 percent ss. If your ratio is high, you may have difficulty securing financing.
How To Lower Your Debt-To-Income Ratio:
1. Increase Your Income:
If you can find a way to make more money every month, your debt-to-income ratio will drop automatically.
2. Pay Off Your Debts:
Another method of lowering your debt-to-income ratio is to pay off some of your existing debts. It will free up more of your income each month, which will, in turn, lower your debt-to-income ratio.
3. Refinance Your Debts:
You may lower your monthly payments by refinancing high-interest debts. It will also help to lower your debt-to-income ratio.
Tip #3: Use a Mortgage Broker:
Consider hiring a mortgage broker if you don’t know where to increase your mortgage approval chances. A mortgage broker makes you understand the lending process and what factors will impact your application. They also advise on how to improve your financial standing.
So, what can you do to increase your chances of mortgage approval and have a better financial standing? Plenty.
Follow the tips we’ve outlined for you in this blog post, and browse our service page to find out more about how Orange Mortgage, serving Dallas, TX, can help.
We offer various services to fit your needs, so don’t hesitate to apply now – we look forward to helping you obtain the home of your dreams!