Financing a house can be daunting for people who are forced to live frugally. Since most people don’t have enough finance to purchase the property they desire outright; the chances are high that they will try to secure an advance. But even if they want to apply for housing finance, they cannot be certain they will be approved for the desired amount.
Lenders follow stringent criteria when approving potential borrowers. This criterion is the eligibility of the borrowers to get the desired loan. And meeting these criteria is not a piece of cake for everyone. With this in mind, we have listed below specific tips and tricks to ace your eligibility and help you secure home loans in Irvine CA. Let’s have a look.
Table of Contents
Secure a Joint Loan
This is one sure-fire step that you can take today to meet all the eligibility requirements. It means that you are applying with a co-applicant. You can co-borrow a loan with your spouse, sibling, and any other family member immediate to you. As you take advantage of this type of lending, you get a co-applicant on board and pool your income together, meanwhile improving your EMI affordability. Ultimately, you increase the total principal amount that you can ask for.
Maintain a Good Credit Score
One major factor every lender looks into, which means every borrower must disclose their credit score. Credit score plays a vast and intrinsic role in ascertaining whether or not you qualify for home finance. If you have a high score, usually 750 or above, you have a positive history with timely repayments. This also helps you claim competitive interest rates for your loan. But before applying for it, remember to run frequent checks on your credit report to allow for any discrepancies. Moreover, pay your debts and clear your credit cards in time to maintain a healthy credit score.
Pay off Your Existing Advances
Now, this is something you need to be wary of. While evaluating your financial fitness, the lender also looks into the debts you haven’t yet paid. To avoid having this matter hinder the process of home loan approval, pay off all your existing lending. Then, it will not be an issue when a lender assesses your current debt obligations by checking your debt-to-income (DTI) ratio. A low DTI, something like 40 percent or less, indicates a good balance between your income and debt. On the contrary, if you have a high DTI, clear out all your outstanding payments before applying for housing finance.
Choose a Longer Term
A longer term depicts a lower EMI amount and, therefore, attracts more borrowers. Besides, it also means higher interest outgo. Thus, avoid short terms and prefer to repay within a long period. You can use a home loan EMI calculator to figure out a preferable EMI and interest and make a savvy decision.
Disclose Additional Income Sources
The greater your income, the better the repayment ability, and therefore, the higher the chances of gaining housing finance approval. So, be up front about your sources of income from the lender and highlight every additional income source you have. This way, the lender can make a properly informed decision and you won’t encounter any strife.
Additional Factors to Consider
Apart from the above tips, it is essential to understand the factors a lender takes into account when deciding to approve your loan request. Be it your age, occupation, monthly income, or work experience — all of these factors play a part. Also, your eligibility can vary according to your mode of income, employment type, and residency status.
In all, to buy your dream home, there is a specific direction to follow, and the preceding tips are your tool to landing the best housing finance deal.