As first time home buyers, you might be faced with applying for a home loan and hoping for an approval. There are many people who apply for home loans and are denied for a variety of reasons. If you want to better your chances of being approved for a home loan, use the guide below to learn a few ways to increase your odds.
Improve Your Credit Score
The first thing you need to do is improve your credit score. Many people think that it will take years and years for them to improve their credit score, but that is not the case at all. You can get a credit card for a local retailer and pay it off on a regular basis to greatly boost your credit score. Showing that you are dependable will prove to lenders that you are responsible enough to handle a loan.
Save Your Money for a Down Payment
Save as much money as you can to put down as a down payment toward the loan. Providing a down payment will show the lender that you are able to save your money and use it wisely. This is important because many lenders do not want to risk giving a loan to someone who does not have a solid loan history, but a down payment will give them the ability to see that you are serious about the purchase you are trying to make.
Have Something of Value to Use as Collateral
If you cannot save up a lot of money to put down as a down payment, consider using something that you own that is valuable as collateral for the loan. If you have inherited a piece of property, a valuable piece of jewelry, or even an expensive piece of artwork, you can put those items down as collateral toward the loan. These objects will serve as a guarantee from you that you will repay the loan on time and in full.
Have a Cosigner Readily Available
If you do not have a strong credit history, having a cosigner available to use when you sign for the loan can make it easier to get. Be sure to choose a cosigner who has a solid credit history or they may not be able to help you get the loan.
When you apply for the loan, you need to let the lender know about everything listed above. If you have someone willing to cosign on the loan, be sure that they come with you on the day that you apply so that they can sign the paperwork too. You should know within a few days if you are approved for the loan and if you are denied, the lender will tell you the reason for the denial so that you can know what you need to do before you apply for another loan in the future.