3 Ways to Impress Lenders for a Mortgage Loan

Getting a mortgage loan is tougher than what it was a few years ago even low interest rates and a weakened housing market might work in your favor.

This is because lenders are for more pickier than usual and will ask for a lot of information before they approve the loan.

So, here are 3 ways by which you can impress a lender into giving you a loan:

#1: Reduce your debts to a minimum

Most lenders have switched back to the old income-to-debt ratios where your mortgage is not supposed to exceed 28% of your monthly income and other debts must not be more than 8% of your income as a whole. While you can get a mortgage loan with higher debt loads, you’ll have to pay extra interest.

#2: A 740 FICO score is what you need

Lenders always use FICO scores from the three main credit bureaus so as to determine what your rates and terms would be like. If it’s for a couple, then both sets of scores will be taken of which the lower of the two will be used.

So, if you work towards getting a score of 740, you’d usually get the best rates. However, if it is below 600, then you don’t stand a chance in getting loans.

#3: 20% down payment in cash still work

Experts believe that a 20% downpayment is the smartest way to go or else anything less will mean higher monthly payments. Alternatively, it’s also a good idea to pay lesser than 20% if you can as you will need the money for emergencies, maintenance and among other things.