The journey to buying a home can be a long and sometimes stressful one. In this journey, lenders are often painted as the bad guys who are killing people’s dreams of becoming homeowners.
In reality, lenders are the ones who made it possible for so many Americans who couldn’t afford to buy their houses outright to become homeowners by giving them a mortgage. You can think of them as white picket fence fairies if you like.(Or not…) In situations where a customer has a bad credit score, or can’t come up with a down payment and therefore isn’t eligible for a loan, lenders are often the best people to help them get back on track.
If you are willing to reach out to your mortgage lender, they might actually be the ones who help you get the loan you’re looking for. Here are 5 ways they can assist you:
- Lenders can help you get pre-approval
Before you start considering neighborhood and number of bedrooms, it is a good idea to get pre-approved by a lender. They will comb through your finances and decide how big a loan they are willing to give you. Wendy Thompson from Bank Of England Mortgage in Memphis, TN says that it is best to apply before you have made an offer on a house. If you wait till then, you could run into big problems.
Getting pre-approved acts as an extra guarantee to sellers, realtors and yourself that you will be able to secure a mortgage once you find your dream house. According to Jean, it’s a good idea to get approval 1-2 months in advance. Be careful not to set out for approval too far in advance though, as they are only valid for 30-60 days.
If the house search takes longer than you expected and your pre-approval expires, don’t worry. Getting it renewed isn’t difficult. In most cases you would just need to run your credit again, get an up to date bank statement and you’re good to go!
- If you don’t get pre-approved, lenders can show you how to get back on track
We understand that rejection is painful, but buying a house is a process. You have to be in it for the long haul. A lender is in the best position to tell you exactly what you need to do, or show to get approval the next time you apply and they’re often quite happy to do so.
- Lenders can help you get a higher credit rating
I bet I’ve caught your attention now. Low credit scores are often the reason people’s approval requests are rejected. Simply put, the higher your score, the more likely you are to get that mortgage. The opposite is also true.
The great news is that credit ratings aren’t set in stone. They can be improved. And who better to help you do that than a lender who understands more than anyone else how a low credit score affects your chances of being approved. Credit repair companies offer the same assistance but at a high cost to you.
In most cases, lenders would be happy to tell you the things you need to do to improve your score. These changes might not kick in for months, but lenders can do what we call a ‘rapid re-score’ that will update your information in days. You definitely want a lender in your financial corner.
- Lenders can help uncommon borrowers
Majority of the people looking to get a mortgage for a house will be earning a regular monthly income from which they can make the repayments. If you are an entrepreneur, a contractor, or a freelancer whose income structure looks a little different, having a relationship with a lender can help you understand what you need to do to show that you are loan-worthy.
Wendy says, “We’re basically just going to look at the last 2 years of tax returns, instead of W-2’s and pay stubs.” She also suggests applying quite early if your income is prone to fluctuation since your finances have to be looked at more thoroughly. On top of all this, you might have to consider timing more than others. If for example tax returns for the year are almost due and you had a great year, it would probably be in your advantage to wait until after you’ve filed your taxes to apply for a loan.
Regardless of the circumstance you find yourself in, to get the most help and create a great relationship in the process, you will have to call or speak to someone in person. That personal touch can make a huge difference, so pass over the online forms and reach out to someone on the phone.
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