How to Ensure Your Mortgage Will Be Approved

In these days of ever-watchful lenders, you, as a consumer, can put yourself in the best possible position to be approved for a mortgage by taking a few simple common-sense steps before you start your home search.

The first step is ensuring you are paying your bills on time. As simple as this sounds, lenders find it extremely important to know that you’re capable of paying on your current debt before they permit you to saddle yourself with even more debt–perhaps more than you can handle.

Second, if you aren’t doing so already, control the amount of your current debt, particularly revolving debt such as credit card balances. Pay special attention to the ratio of your balance to your limit and try to keep this below 30%.

For example, if you have a credit card with a $ 500 limit, try to keep the balance under $150. If the ratio goes too high, even on lower-limit cards, it looks to the credit bureaus as though you are about to reach the full limit of the card, which tends to drive down your credit score.

Having multiple cards that are at or close to their limits may start impacting the number of mortgage programs as well as the dollar amount you are able to qualify for.

It’s always a good idea to either pull your own credit, which you should be regularly doing anyway, or ask your mortgage professional to pull it.

If it turns out that there are unexpected items on your credit report that need to be addressed and/or removed, this action will give you the opportunity to take these steps before starting the approval process.

But don’t leave it too long; you can expect that any type of action to correct a credit report will take a minimum of 30 days to affect your report.

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