Lesser known things to help secure a pre-approval

There are many components to a mortgage application that almost feels like common knowledge; however, as your trusted mortgage professional, I’ve compiled some quick and easy, and yet, lesser-known tips that will help you with the mortgage approval.

Guarantor

A guarantor is somebody who helps with the application by agreeing to guarantee that payments are fulfilled if the initial borrower happens to default.  Anybody who co-signs as a guarantor is placed in the same situation as the borrower, and if need be, if the situation comes down to it, they will be called on to repay the loan in the same agreed fashion as the borrower.  One caveat here is that the income of the guarantor usually is not used in qualifying for a mortgage.

Gift Letter

Sometimes, you just don’t have enough saved up for a down payment to secure a mortgage.  One way to help increase the chance of an approved application is by the use of a Gift Letter.  If a close family member is willing to help out by providing funds for a down payment, they can do so by providing a gift letter stating that the funds are given and gifted and not to be paid back to them.  This is a great way to get started with your first home.  A disclaimer though, if the gifted funds are to be repaid, this would be considered equity fraud.

Free Up Credit and Liability

Much of the mortgage application process is the examination of the liability the borrowers are holding; this is the amount of their monthly obligations in relation to their income and how much of their open credit lines are filled with debt.  When applying for a mortgage loan, it’s highly recommended that your lines of credits and loans are cleared out; this will show the lenders that you’re financially responsible and will have much more room to pay the mortgage. Take a peek at my blog on Debt Service Ratios here to see how having less liabilities can help with a mortgage application.

As your trusted mortgage professional, it’s on me to ensure you are given the best knowledge possible.  Click here to see more informational blogs or feel free to leave a message so we can chat.