How to Increase Mortgage Pre Approval Amount
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What Is Mortgage Pre-Approval?
A Mortgage preapproval is a process where a lender reviews your financial history to determine the amount they're willing to lend you for a home purchase. This involves a detailed look at your income, assets, credit history, and other financial commitments. Based on this evaluation, the lender will provide a letter stating the specific loan amount they're willing to approve.
Purchasing a house is one of life's most important decisions. The process can appear daunting, but the experienced Texas mortgage brokers here at Flagstone Mortgage are here to help..
Tips On How To Increase Your Pre-Approval Amount
Are you dreaming of that perfect home but finding your mortgage preapproval amount to be a limiting factor? Fret not! By focusing on a few key strategies, you can work towards increasing this all-important figure and, ultimately, get closer to owning your dream home.
Improve Your Credit Score
The cornerstone of any mortgage application is your credit score. If you're nodding in agreement with a credit score that's nothing short of impeccable, you might be at your peak. But for many, there's room for growth. By taking the reins on improving your credit score, not only might lenders feel more comfortable increasing your preapproval amount, but you could also be privy to reduced interest rates.
Generate More Income
While your W-2 might be your primary income source, you might be leaving money on the table. By revisiting your income streams, you can paint a fuller financial picture. Don't forget to factor in additional earnings such as alimony, child support, disability income, VA benefits, and even that weekend side hustle. Including all of these can give your application the extra push it needs.
Pay Off Debts
Your debt-to-income ratio (DTI) is like a seesaw. The heavier your debt, the lower your preapproval might tilt. Streamlining debts, especially high-interest ones like credit cards, can make a world of difference. By reducing this monthly financial obligation, you pave the way for a higher preapproval amount.
Find A Different Lender
Remember, lenders are as diverse as the loans they offer. If one door closes, or in this case, offers a lower preapproval, another might just open with a higher amount. Exploring multiple lending options could be your ticket to better terms.
Make A Down Payment Of 20%
While that initial chunk of 20% might seem steep, it's an investment in your home-buying journey. By putting down 20%, you can bypass private mortgage insurance (PMI). This reduction in monthly costs could translate to an elevated preapproval amount.
Apply For A Longer Loan Term
While short-term loans are enticing for their quicker payoff, they come with heftier monthly payments. Stretching the loan over a more extended period, like a 30-year term, can make each payment more manageable, potentially swaying lenders to boost your preapproval amount.
Find A Co-Signer
Securing a co-signer is not without its challenges. After all, they're placing their financial reputation on the line for you. But if you can find a trusted friend or family member willing to back you up, it could give your preapproval a significant lift.
Find A More Affordable Property
Sometimes, the best approach is a tactical retreat. If upping your preapproval amount isn't feasible, recalibrate your home-hunting radar. Using tools like a mortgage calculator can give you a clear picture of what you can afford. Remember, it's about finding the right home within your means, not stretching beyond them.
Feeling inspired to take the next step on your home-buying journey? Diving into a new mortgage application could unveil the home you've been waiting for. It's time to turn that dream home into your actual home.