There are many benefits that come with homeownership. However, before you can begin to enjoy these benefits, you will first need to overcome the hurdle of qualifying for a first-time home buyer mortgage loan. Thankfully, the three tips below can help you to overcome this hurdle and realize your dream of owning your own home.
Tip #1: Deposit Any Cash Savings You Have
Lenders want to know that you are financially stable before approving your application for a mortgage loan. You need to demonstrate that you can make your loan payments even if you temporarily find yourself without income. That is why lenders check your bank account balance when reviewing your application for a first-time home buyer mortgage loan. If you are currently saving your money in cash either in your home or in a safety deposit box, you will want to deposit these funds into your account before submitting your loan application. This will ensure that lenders get an accurate view of your financial situation when checking your account balances. This can ultimately increase your chances of being approved for a mortgage loan.
Tip #2: Ask A Family Member To Add You To An Established Credit Account
One problem that many first-time home buyers have is that they do not have an extensive credit history. If your credit history is on the short side or if you have had credit problems in the past, asking a family member to add you as an authorized user to one of their established credit accounts can provide you with an instant boost to your credit score. Getting added to a long-standing account will also increase the average length of your credit history. This can help to give you a far better chance of getting the mortgage funding that you require.
Tip #3: Avoid Opening New Lines Of Credit Before Applying For A Mortgage Loan
While getting added to a family member's credit account can be beneficial, opening a new credit account of your own can have the opposite effect. There are two reasons why this is a bad idea. First, each time you apply for a new line of credit, a hard inquiry is added to your credit report. This can temporarily lower your credit score and make it harder for you to get approved for a mortgage loan. Second, adding a new line of credit will shorten the average age of your credit accounts and again can lower your credit score. Since your credit score plays a major role in your ability to qualify for a mortgage loan, it is best to steer clear of any actions that could lower your score.
For more information about qualifying for a first-time home buyer mortgage loan, contact a local lender.