Owning a home is very satisfying, but getting the money to buy a home becomes tricky. It takes a tiresome underwriting process because the lender will fund your housing, so they have to be sure you will pay back their money.
A mortgage is a contract between you and the lender to refinance without you paying all the cash up front. This agreement gives your lender the legal right to take back the house when you fail to comply with the terms of your mortgage, most likely not paying the money you were lent plus its interest. Your lender will need several documents to complete the lending process.
- Last year’s tax returns
- Proof of your income
- Rental history
- Proof of your employment and its history
- Bank statements
- Brokerage statements
- Documents of your other assets and debts
Here are tips on how to get the mortgage
Tips for Getting a Mortgage
A Strong Credit Score
With excellent credit scores, you show your lenders you can manage your debt, and likely your mortgage will get approved, and you can own your dream property. Purchasing a property in the South of France is a smart investment as recession on the Cote d’Azur is always far away. If your credit is a bit low, you will get a loan with higher interest. So ensure you have a strong credit score because you will get a loan at favorable rates. To improve your credit score, you should
- Pay on time and ensure you reduce your credit balance. Remember, your lender can date your report two years back, so start soonest if you can
- Make all due accounts current.
- Check your credit. If there are errors, contact the bureau to correct
Check your credit score three months before applying for a loan. If you find anything that needs changing, you will get your credit score in shape.
Debt to Income Ratio (DTI)
DTI also plays a vital role in qualifying for a mortgage. It’s calculated by summing up monthly debts and dividing them by your monthly income. Some debts affecting your DTI include credit card statements and auto and student loans.
Your lending company will check if you have extra money when applying for a mortgage to ensure you can pay the loan even after a financial problem. They will look for your assets and other accounts where you draw cash, for example.
- All your Savings accounts
- The Retirement accounts
- Your other Taxable investments
Type Of Property
The type of property you are getting may affect your mortgage because different properties have different levels of risk to the lender. For example, if you apply for a single-family home for a residence, you will have better terms. Your lender understands most people have primary housing in their budgets. But for an investment property, you will have to pay more and have a better credit score because if you get into financial hardship, you may make it your priority.
Before your mortgage gets approved, the lender must check your credit score, income, assets, and debt-to-income ratio. You have to provide all the necessary documents for reviewing to prove you qualify for the mortgage.