Buying a house is one of the largest financial purchases we’ll make.
Completing that purchase requires applying for a mortgage, yet a lot of people find trouble when it comes to getting approved fast.
Here are some steps that can help hasten the process, even for low-income earners.
Applying for a Mortgage Loan: What Do Lenders Need?
Fast approval brings a lot of benefits to the table. It brings peace of mind for both you and the seller. It also means access to lower mortgage rates.
It’s best that you avoid going through a lengthy application.
Lengthy mortgage approval usually accompanies higher rates due to the rate lock period and exposes you to more risk of denial.
It’s all about being prepared to lower the risk of denial and avoiding lengthy applications.
Fixes for delays during underwriting can happen as long we apply the right steps.
Some of those fixes are:
Keeping Open Communication
Applications will sometimes need more documents that weren’t included in the requirements.
Some requested documents you might miss are:
- A letter proving that you have full access to a co-owned bank account
- Images showing checks going into your account
- A copy of the divorce decree and proof you are receiving money from alimony
Also, don’t ever plan to suddenly disappear or stop the application process without notifying the lender.
Aside from raising your chances to be denied on your next application, your application may get delayed further if you resume the application at a later date.
Check Your Mortgage Credit Score In Advance
Problems usually arise when there is an error with an applicant’s credit report.
Many are unaware of these errors, which can delay their mortgage application.
Because of that, you always need to make sure that there’s no problem with your credit score, and if there are, you should fix them immediately.
The goal is to find and remove any inaccuracies. There is also the added benefit of knowing your credit score in advance.
If you know your score, we can match the best mortgage loan to apply for, speeding up the process.
Avoid Any Major Life Changes
While some life changes are unavoidable, most of them happen because of our decisions.
It’s essential to avoid making drastic changes during the application.
You have lower chances of approval if you make a significant life change during verification. Diligence is critical here.
If the discovery of a change happens during the process, the loan will be rewritten.
Here are some actions you should avoid during the loan process:
- Applying for a new credit card
- Missing payments that affect credit
- Making a sudden large deposit
- Bouncing a check
- Changing or quitting a job
- Buying an expensive item like a car
- Altering the source of the down payment
There are a lot of documents needed for mortgage approval. These depend on the type of loan but in essence. They prove that you meet the standards for support.
Records show your bank assets and credit rating, to name a few.
It’s also common for lenders to ask for two years of federal income tax returns.
They also need recent statements covering bank, retirement, and investment accounts. Keep any transactions such as deposit slips and transfers.
If you are self-employed, then you need a recent pay stub. This also applies to people getting income from commissions or investments. Requirements also include a couple of W-2s.
Now that you are aware of the required documents compile them in advance to help the process go faster.
It is also essential to communicate with your mortgage lender to get extra advice. We can help provide more information so that the process isn’t disrupted.
Check out these common home loan filing mistakes you’re probably making.
What If I Have Low Income?
Being a low income earner can be difficult. You’re saving for a down payment, trying to keep a clean credit score, and maintaining a good debt-to-income ratio.
The good news is that some of the best mortgage programs are available to you.
The government established many programs to help give low-income earners a chance at purchasing a home of their own.
Some benefits these programs offer include:
- Down Payment Help
- Low Down Payment Requirements
- Mortgage Insurance Discounts
- Below-market Payments And Interest Ratespproved homebuyer education program, and of course, you should also plan to live in the house you’ll purchase.
The home cannot be a rental or a vacation home. Some of the most popular low-income programs include:
1. HomeReady And Home Possible Advantage: a program that has a small down payment. It requires only 3% of the house’s price.
2. The Good Neighbor Next Door Program: offers many unique benefits. This is only available for teachers, nurses, and first responders. If you are eligible, you can buy a HUD foreclosure home at a 50% discount.
3. USDA Home Loan: applicable if you plan on buying a house outside city limits. You can buy a rural home with no money down and 100% financing.
4. FHA Home Loan: tailored for lower-income individuals. The program relaxes the borrower’s standards for a mortgage.
5. VA Home Loan: available for military home buyers. It doesn’t have down payment requirements. There is also no minimum credit score.
6. Personal Loan: it is also possible to find a home that is not financed by a traditional mortgage. Some examples are mobile homes, which are not considered real estate. These homes have low sale prices and are usually in the market because the seller wants to let go of the property. In these cases, you could apply for a personal loan, making approval faster.
Now that we see all the paths and requirements you can take, get your home loan approved.
At Sprint Funding, we help you find the best mortgage plans in the US.
We are always open to answering your questions and helping you find the best options.