How To Qualify For A Larger Mortgage?
Home prices are rising sky high and qualifying for a mortgage is not easy, leave alone qualifying for a larger mortgage. Going through the process with the help of a mortgage broker ensures you qualify for a larger amount than what a big bank would offer you per your qualification. Your options are usually limited if you make a down payment of less than 20%. Those making a greater downpay get more options. The rate of the mortgage and its overall cost is what separates you from getting just a home versus a home you will love. So let us explore how you can get a home you desire and qualify for a larger mortgage. Pay off debts If you have debts on your credit cards month after month or have a big payment towards your big car, it can directly impact your mortgage qualification criteria. If your minimum payment towards the credit cards is low, it does not matter much as the lenders will use 3% of the balance as minimum payment each month. In simple terms if you keep your debt to the lowest possible, you qualify for a bigger amount or the maximum you could get. It is advisable to pay out a part of the debt or even all of it if you have additional funds or can arrange for it somehow. These could be from your bank, from a previous investment, or you could ask a family member for help. Buy A Home With A Rental Unit You must consider buying a home with an additional unit like a basement which can take the maximum amount you qualify for, further up. The estimated rent for this unit is considered your income. Usually 50% of this estimated income from rent is added to your actual gross income. And it can help your qualification a lot. Pick A Longer Amortization Period A longer amortization period simply means you have to pay a lower amount towards your mortgage every month and hence your debt-to-income ratio will be lower. If you have a 25 year amortization period you can opt for 30 years as the amortization period. The amount of money you pay less in the 30 year amortization period versus a 25 year amortization period, qualifies you for additional sum for your mortgage qualification and the difference can be substantial. On the other hand you could also make use of the prepayment option after closing to increase the payment to match that of the 25 year amortization period. Other options to make you qualify for a bigger amount include using a private lender, using an AB lender, or choosing a lender who has more flexible rules for you to adhere to. All these above points can ensure you qualify for a larger sum and are nearer to having your dream house. For more information on qualifying for a larger mortgage or help along the way do not hesitate to reach out to LendX Financial.