3 tips to help you get approved for a mortgage

If you want to buy a home, you’ll probably need to take out a mortgage. Here are some tips to help you get approved.

1. Improve your credit score
Before you apply for a mortgage, review your credit score. This is the number lenders use to evaluate your credit risk and determine if you’re a good loan candidate. The higher your credit score, the better your mortgage rate is likely to be.

To improve your score, pay your bills on time, keep your credit balances low and reduce the amount of debt you owe.

2. Pay off debts and avoid incurring new ones
Another important factor that mortgage lenders look at is your debt-to-income ratio. The lower your debt is when compared to your income, the more likely you are to be approved for a home loan. In addition to paying off existing debts, you should reduce the amount of new debt you incur. Take a careful look at how you spend your money and figure out where you can cut back on expenses.

3. Save for the biggest down payment possible
The minimum down payment you need to get a mortgage is 3.5 percent of the home’s total cost. However, if you can afford it, a 20 percent down payment will lower the balance of your mortgage and alleviate the need for private mortgage insurance, thereby reducing your monthly payments.

If you don’t currently meet the requirements for a home loan, don’t give up. Instead, take steps to improve your financial situation and, once you’re in a better position, try again.