The process of buying a home actually starts much earlier than the actual search. If you are not good at preparing for it or you are making huge financial mistakes, the purchase may be delayed or it may not take place at all. Here are some of the mistakes the not-so-smart ones commit.
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Bad Credit Score
Make sure there’s nothing “red” on your credit. If your credit is suffering from bad debts, there are things you can do to improve it.
- Check for false entries. If you find some, go to the concerned agency and have those entries removed.
- Pay your bills now. If possible, borrow money from institutions or from people close to you. Anything that does not reflect on your credit may be advantageous to you.
- Ask other people to allow you to join in their existing accounts. If they have a good standing, joining them will improve your score.
Your goal is to have a score of 600 or higher and of course, do well on your credit. There’s really nothing good that you can get out of a bad credit, so just try to keep it clean.
Bad Dti Ratio
This is the debt-to-income ratio, which means this is the percentage representing the part of our income paid to your monthly liabilities. If the percentage is high (beyond 43%), getting a mortgage approval will be harder.
At 43% or nearly lower, you will still have a hard time getting approved. Talking to the mortgage broker may help but don’t expect for a low premium. You are a high-risk case and therefore you will have to be subjected to a kind of test by giving you high monthly premiums.
Make sure that you do better this time by controlling your debts and not purchasing things that are not really necessary for you to live comfortably. Anything that’s more than what you need should be considered a waste of money and detrimental to your credit and your buying power. You may also increase your income as a way to improve your credit worthiness.
Your Income Is Unreliable
Lenders don’t think it’s a welcome idea to approve a request from someone who has no steady income. In mortgage deals, you have to present evidence of a good disposition in running your life and getting yourself employed with sufficient earnings. Show them you are a person worth taking the risk.
What can you do if you don’t have a steady income? How about a stated income or a stated asset mortgage? Such a mortgage type doesn’t require a lot of documentation although they will still have to verify your income. Nonetheless, with this type of loan, providing documentation will not give you headaches. By being honest of your circumstances can also get you a long, long way. They may require you to get a co-maker, so as early as possible, talk to a relative or anybody who trusts you.
Don’t get it wrong when you feel there are too many things that they require. Everybody is just protecting their interest, and lending institutions will not take risky deals if that means putting their business at a big disadvantage.
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