How to improve chances of mortgage approval as a First time home buyer?

As a first time home buyer, getting the mortgage approved is one of the most crucial steps. From the size of downpayment to the credit score, there are many elements that can have an impact on your chances of approval.

In this article, We will be walking through the various tips to improve your chances of mortgage approval as a first time home buyer.

But first, let’s understand what a mortgage is and how it works. A mortgage is basically a loan given by a bank/ third party to the borrower for buying property and to pay for repairs or improvements if necessary. The borrower pays back the loan with interest over many years with monthly payments which depend on the type of mortgage product selected by him/her.

Here are the tips for improving your chances of getting your mortgage approved easily:

1. Advance financial planning: Start planning for home purchase at least a year prior to purchasing. Besides saving for the down payment, also start focusing on your credit score and also you should also meet debt-to-income ratio for your mortgage amount.
2. Get prequalified early: Start planning ahead, know exactly what your credit score is and know your amount of down payment that you will need to pay. There are many other costs involved in the process of mortgage approval, which you need to know.
3. Speak to a Mortgage Broker: Before you apply for a mortgage, it’s necessary to understand your finances. Consult with the best mortgage broker in Surrey, BC. It’s important for you to know how much you afford and the down payment requirements to determine the type of mortgage you choose.
4. Clear the outstanding debts: One thing you should never ignore is clearing your outstanding debts. Do speak to a lender who can guide you right in your first financial journey so that there is no chance of a mistake.
5. Pay down debts: Lay stress on reducing your debt-to-income ratio by paying down all the debt with the highest monthly recurring payments. Also make sure that there are no inaccuracies in your credit report and hold back from applying for any form of credit at least a few months before applying for a mortgage. Keep your credit score as high as required.
6. Restructuring Recurring debt: Your purchasing power is definitely impacted by your recurring debt payments. By restructuring your debt you can increase your purchasing power which will eventually help you to reduce your monthly payments.
7. A consistent and stable employment: And nothing can beat the impact of stable employment . No matter what work you do whether you are a player or a business owner you need to be stable in your work. Even a few months of stable employment with a particular employer can help increase your chances of getting your mortgage approved and can turn your dream of a new home into reality.
8. Check your credit: Being a first-time homebuyer, the most reliable way to increase your chances of getting a mortgage approved is to check your credit score and save up for a down payment.
9. Be honest while applying: Don’t lie while applying for the mortgage. You should have 12 months of check stubs verifying your employment ready with you. Do pay off any small revolving amounts or long-term commitments. Avoid buying anything other than necessities during the lender approval period. Try to obtain and give all information requested to the broker in a timely manner.
10. Know what lenders will be looking for: Get a headstart. Purchasing a new home is obviously not an overnight decision. That being said, reach out to your lender for a checklist of what they will be looking for like what documents they will need and start working on it now. That may be anything related to cleaning up items on your credit to sourcing down payment funds. Not only the employed ones but even self-employed people may also need to show more steady income leading up to the pre-approval mortgage process.
11. Cut unnecessary expenses: Getting your required credit and finances to buy a house is simple. Just start by cutting unnecessary costs to pay off bad debt such as credit cards and saving money for a down payment. Although the hard part is having the patience to do those things, you need to do them.
12. Save as much as you can: Work really hard to save up for the down payment. The Down payment assistance programs mug you of so much buying power and still most people can save a down payment with some effort.

The process of mortgage approval as a first time home buyer can be intimidating, especially because of the high cost. If you are planning to buy a new home in Surrey, BC do contact Alpha Mortgage House Corporation- the best mortgage broker in Surrey BC. We will guide you with the best advice and help you to get your mortgage approved easily.