You may successfully get pre-approval for a mortgage, but this doesn’t necessarily qualify you for one. Most people think that once you get the mortgage pre-approval, all they need is to get some deposit, sign some papers and purchase the home.
Nothing could be further from the truth; several things could disqualify you from getting a mortgage. Knowing these factors will help you prepare and maintain your pre-approval status.
1. Your credit score
New bills, delays in paying debt and taking up more debts are some of the factors that could affect your eligibility for a mortgage. If after preapproval, you get a low credit score, lenders look at this as a delinquent loan ticking and waiting to happen.
After getting pre-approved, avoid doing things that could hurt your credit score. One thing potential homeowners forget is that the credit score could affect the mortgage rate for the home loan in Tempe. VIP Mortgage notes that the best rates always go to the best borrowers.
2. Taking on more debt
One of the key things lenders look at is how much debt you have during the application. Mortgage pre-approvals depend on your debt situation at the time of application. So, typically, changes in your debt ratios will affect your ability to obtain a mortgage.
Maxing out your credit card, for example, makes you the risk to the lender and the chances are that your pre-approval status will disappear.
3. Changes in your employment or income status
Your employment and income status determine your eligibility for the mortgage. Remember, the lender needs to know if you will be able to pay the mortgage so a slight change in employment or income will affect your pre-approval status.
If you keep changing jobs after pre-approval, the lender will doubt the stability of your income. Changes in any of these (employment and income) will require the lender to reevaluate your financial situation.
Paying attention to your credit score, debt, employment and income will help you maintain your pre-approval status and get the best rates for a home loan.