Buying a home can be one of the most emotionally exhausting purchases one will ever make in their lifetime. Home buying is a process that begins with the look, which then quickly moves to the romantic imagining of oneself in this home.
You imagine what color you’d paint the walls, you’d imagine how you’d outfit your garden; so the fact that the longer part of the home buying process, the bidding on a home and application for a mortgage can be time-consuming, clerical, and unromantic is the yin to the home buyers yang.
In truth you shouldn’t even look for a home until you are pre-qualified for a mortgage; it will save on the heartache later down the road if you are denied.
Here are five tips of things to do to be successful eventually, when you are, at first, rejected for a mortgage application.
1. Look at Your Home Price
Maybe one of the first things you should do when you’re rejected for a mortgage application is looking at the home you’re trying to buy.
If you’re making nine dollars an hour working part-time at Victoria’s Secret and your husband’s a student; you’re probably not going to get the best house, in the best neighborhood, on your pittance of income alone.
Consider looking elsewhere for a home in an up-and-coming, less expensive neighborhood.
2. Look at Your Credit Score
This is a no-brainer, but if you’re looking at a rejected mortgage application, maybe you need to look again at your credit score.
If there are glaring errors or other factual inaccuracies on your credit score, clean those up, get verification that they’ve been eliminated, and get back on the case of the mortgage company.
3. Look at Your Income
Again, if you’re talking about a home that is going to make you all but bankrupt just to keep up with the mortgage payments, then you might want to reimagine your home buying experience.
The general rule is that your mortgage should never account for more than 25% of your total income; that’s the money you’re taking in every week. So if you make $37,000 a year (net pay) that means that your mortgage should only be $771 or less a month.
Unrealistic expectations for a rising tide of home values and rising income is a lot of what took the housing market under in recent years.
4. Look at Your Unreported Secondary Sources of Income
If you only make $37,000 combined income on the books with you and your spouse, then that’s fine.
But if your mortgage amount on the house you want is more than that $771 dollars, you may need to figure the other ‘off-the-books’ sources of income you have.
If that includes working weddings for cash, your tax-free annuity settlement, or your scores of articles you write for Associated Content, that’s something you need to consider.
There are different ways of handling that income so you should speak to your real estate person about your specific situation.
5. Look at Other Sales in Your Immediate Area
If you are looking to move into a specific neighborhood and you’ve been told that you’ll need to pay at least $400,000 to live there, but you don’t qualify for that much mortgage, look towards other recent sales in the neighborhood; you may be surprised!
If other folks are snapping up homes for far less and you think you’d be able to qualify for mortgages of similar amounts, apply for that much and see if you can’t find the house to match.
Buying a home is an exhausting experience. If you get rejected on your first mortgage application, consider the five tips above and you could find yourself living the charmed life in the home of your dreams in no time!