How Can I Increase My Approval Amount To Buy A Home?
I’m sure it took some work to become approved for your mortgage and now you have a new challenge: your pre-approved loan is too low. Now you’re in the question of, how can I increase my approved amount? Let’s go over some awesome ways you can reach, or get a lot closer to the amount you need.
Raise Your Credit Score
Your credit score is directly linked to the loan you can potentially receive. By raising your credit score you’re able to get a lower mortgage rate, meaning you’ll probably be approved for a higher loan amount. What’s a quick way to raise your credit score? Start paying off debt that you owe. It may seem difficult right now but it may be worth it so that you can get the loan you need right now. Aim for getting your cards below 15% of your credit limit.
Put A large Downpayment
Once you pay at least 20% of a downpayment on a home then you can avoid the PMI(Private Mortgage Insurance). Sometimes the PMI rate can be as high as 1% of the loan amount. By paying big now you can avoid paying big later.
Evaluate Your Debt-To-Income Ratio
This ratio determines how much you are allowed to borrow. Some of this may be hard to change quickly, however, you may have some compensating factors you forgot to add to the equation such as a large down payment, high income, 5 or more years at current employer, good FICO credit score, or a large number of cash reserves.
Adjust Your Rate
Some lenders now offer 40-year loan rates. This opens up lower rates and can allow the opportunity for some people to afford more expensive homes. If your situation improves financially then you’ll be able to pay off that loan much faster of course.
Look For Other Incomes
The higher your income the more you can afford. Seems obvious right? Well, some people tend to forget their other sources of income. If you regularly sell things online, get checks in the mail, receive child support then you can add that to your income. Look around at what you think qualifies as income and then go for it!
Check For Other Lenders
Other lenders may give you a worse or better rate so it’s important to shop around. Even if you find a lender who is only willing to lend you $3k more then at least that’s something. You never know if you don’t ask around.
One Thing To Remember
Be patient. It’s difficult and frustrating when things hold you back from what you want but don’t add any more resistance to it by being impatient. Breath, and then move forward with what you can do. Soon before you know it you will have a new place to call home and then a new set of challenges. Enjoy the process as much as you can or at least accept it.