3 Tips to Instantly Boost Your Home Loan Eligibility

To buy your dream home, you have to work hard and save up as much as you can. However, not all aspiring homeowners can afford to make an offer on their dream home because they aren’t eligible for the mortgage they need in the first place. If you’re one of these people, there are several steps you can take to instantly increase your eligibility. Keep reading to learn how to increase your home loan eligibility with these three simple tips!

1) Check Your Credit Score

A high credit score is a must for getting the best loan. You should check your credit score and make sure it’s accurate by requesting a free copy of your credit report from each of the three major credit bureaus. If there are any inaccuracies, you can dispute them. You also want to make sure that all of your debt balances are accurate and up-to-date, and that you have a good mix of different types of loans, which could help improve your scores.

Ask for a Pre-Approval: Get pre-approved for the home mortgage or refinance before you start shopping around, so that you know exactly what size mortgage or refinance loan you can qualify for. Have Documentation Ready: When buying or refinancing a home, lenders typically require documentation of your income and assets as well as information about where you live now and where you’re looking to buy. Make sure these items are prepared in advance so they’re available when needed.

2) Check Your Debt

1. Check your debt. There are two types of debt: good and bad. Good debt is defined as any type of loan that has a low interest rate, like student loans or home equity loans. Bad debt includes credit cards, payday loans, or even car loans with high interest rates. When you apply for a home loan, the lender will use your total monthly payment for all debts in determining how much you can afford for a mortgage payment. The lower the monthly payment on your debts, the more money you’ll have each month to put towards a mortgage payment!
2. Get rid of bad debt first. Paying down your bad debts can make it possible for you to qualify for a larger loan amount, which means more money in your pocket! For example, if you take out a $100,000 mortgage at 3.5% APR and pay off $8,000 in credit card debt at 15% APR, you’ll save about $130 per month! That’s an extra $1,560 per year just by paying off one piece of bad debt.
3. Get Pre-Approved: Getting pre-approved for a home loan before you start shopping around ensures that you don’t waste time looking at properties beyond what your budget allows. Plus, some sellers require buyers to get pre-approved before submitting offers. If you don’t get pre-qualified early in the process, then finding a property might become more difficult than expected

3) Save More

One of the biggest factors that go into a home loan application is the borrower’s debt-to-income ratio. Generally, lenders want your total monthly debt payments (including your potential mortgage payment) to be no more than 36% of your gross income. The higher your income, the lower this percentage needs to be.

One way you can instantly boost your home loan eligibility is by increasing your savings account balance. This will reduce the amount of money you have going out every month and make it easier for you to afford a mortgage in the future.

You can also try asking for a raise or finding another side gig so that you’ll have more incoming cash flow each month.

Another way you can instantly increase your home loan eligibility is by paying off your current debts as quickly as possible. Once you’re able to reduce your existing monthly debt payments, you’ll have more cash flow each month that will free up additional funds for a mortgage payment.

Conclusion

With a little bit of legwork, you can easily increase your home loan eligibility.

Here are three tips that will help you get started:

1. Have a stable income that is sufficient enough to handle all the monthly payments associated with the loan.
2. Obtain two or more personal references who can attest to your financial responsibility and good character.
3. Apply for a credit card and start using it responsibly. With these three simple steps, you’ll be well on your way to getting approved for a home loan.

That being said, there are a few things you should avoid doing. Don’t lie on your application or withhold information about important factors that can affect your credit score and home loan eligibility, such as any bankruptcy filing in your past. If you’re self-employed or have recently lost a job, ask for an extenuating circumstances clause that might help explain any sudden drop in income on your application. You’ll also want to try and keep all of your debt load low enough so that it doesn’t outweigh all of your available income.