Are you looking to buy that dream house? Well, you must have your finances in place first. It is not possible to buy a house by digging into your savings. So, a mortgage loan can come to your rescue.
If you are buying a plot to construct your house, you can also get a land mortgage loan. But, how do you understand the options open to you? For that, you need to get prequalified for a mortgage.
What is Prequalification For Mortgage?
Prequalification is a process where your lender checks your credit score and finances to determine your eligibility. They also decide how much you can borrow.
It is the first step to take before looking out for houses. However, prequalification does not guarantee that you will get the loan. Before lending you, the financial institution will perform another round of checks and verify your documents.
How to Get A Mortgage Prequalification?
The process of getting prequalified might depend on your lender. These days, some banks and NBFCs might allow you to get prequalified online. However, the procedure might be similar for all.
You need to provide them with some information and submit a few documents. Here’s what they might require.
- Your personal information (the lender might check your credit score)
- Information about salary or income
- Bank account details
- The amount you want to borrow
The lender might not ask for your tax returns. So, you can understand that they are collecting incomplete information. Therefore, your prequalification does not ensure that you will get the loan.
What purpose does it serve then? Well, it will give you an idea about how much loan you can take. And, you will be able to look for houses accordingly. Moreover, getting prequalified might also make a good impression on the sellers.
Now, if prequalification does not guarantee a loan, what can you do to boost your chances of getting a loan?
How to Increase Your Chances of Getting a Mortgage?
- Try to Maintain a Good Credit Score
Your credit score is the most vital factor that can get you the loan. Try to keep a score of 700 and above. That will create a good impression on your lender. Moreover, you will also have greater bargaining power.
- Pay Off Your Existing Debts
If you have any existing debts, your lender might not want to give you a new loan. So, make sure you clear all your debts before applying for your mortgage loan.
- Try to Increase Your Income
You can start a side hustle that can boost your income. It will increase your chances of getting a better loan.
Do not forget to check the mortgage loan interest rates before making the final decision. You can compare the rates of different lenders to get a better deal.
Prequalifying can help you in the buying process. But you cannot get your dream home before your loan gets sanctioned. So, follow the tips above to get your mortgage loan quickly.