To qualify for a mortgage, you usually have to meet certain requirements. For one thing, you need:
- A sufficiently strong credit rating
- A reasonable, not excessive, level of existing debt of
- A steady job
- Funds for a deposit
Lots Mortgage lenders have tightened their lending requirements in the wake of the pandemic. After all, mortgage lending comes with risk, and lenders need to make sure they are working with borrowers who are likely to continue to repay their home loans.
In May, Mortgage lenders have eased credit requirements, and loan availability increased compared to April, according to the Mortgage Bankers Association. That made it a little easier to qualify for a mortgage. However, in June, the availability of mortgage credit decreased by 8.5%.
If that percentage looks like a lot, it is it. The availability of mortgage credit in June is the lowest since September 2020. And that could make it more difficult buy a house in the near future.
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How you can give yourself a better chance of getting a mortgage
Just because mortgage loan availability decreased in June doesn’t mean your chances of getting a loan are ruined. If you are a strong candidate, you may not have any problems getting a home loan.
Even before you apply for a mortgageThere are steps you can take to increase your chances of getting approval.
1. Boost your credit score
Your credit-worthiness speaks volumes about how trustworthy a borrower you are. Typically, you need a credit score of at least 620 to get one conventional mortgage. But now that lenders are tightening, a score of 620 may not be enough.
Well worth working on Increase your credit score. A better score not only increases your chances of getting approved for a mortgage, but it can also help you qualify for a low one interest rate. You can improve your credit score by:
2. Discard debts
Your Debt-Income Ratio Another measure that lenders use to determine if you qualify for a mortgage is as it measures your existing debt in relation to your income. If your rate is high, it sends a message to lenders that you are already spending a lot of your earnings on debt and that if you are approved for one, you may not be able to keep up with a mortgage. Paying off debt is the best way to lower that rate.
3. Make sure you have a solid deposit
The more funds you spend for a. have available deposit on a house, the less you have to borrow. And the less you borrow, the less risk mortgage lenders take. It might be worth it start a part-time job for a few months. That way, you can use your earnings from it to help you save for a deposit.
While lenders may have stricter borrowing requirements in June, that doesn’t mean you are meant to be yours Mortgage application rejected. At the same time, it is worth doing everything possible to increase your chances of getting the loan you want, at an interest rate that makes it easier to manage your monthly payments.