Housing prices are low, and interest rates are even lower, which means more and more homeowners are buying property, taking out a second mortgage, or refinancing their loans. Many homeowners are further attracted to the prospect of purchasing a new home with what’s called a rate lock.
A rate lock means that your interest rate won’t change between your initial offer and when you close on a home. However, with rising interest rates and misinformation constantly in circulation, homeowners must recognize that just because you have a rate lock doesn’t mean your loan is approved. Still, there are plenty of ways to ensure your loan is approved.
Check Your Credit Score
One of the easiest and most common ways to ensure loan approval is to allow your bank or lender the ability to run your credit report. While banks checking your credit score is a pretty common practice, homeowners may be apprehensive about allowing more than one lender to run their credit report for fear that it may lower their overall score.
The good news? Credit bureaus know that shopping for mortgage rates is familiar and generally exploratory, so having more than one mortgage-related credit report run in a given month won’t hurt your credit score.
Provide the Lender with Documents
If a potential lender offering a rate lock requests documentation, provide it immediately. Documents like paystubs, bank statements, tax returns, and various income-related documents are requested during the lending process. Make sure you’re ready!
Does Your Property Qualify?
Most homeowners expect to be approved for a rate lock based on financials and credit scores alone, but the truth is, the property has to qualify for a rate lock too! If the home you’re hoping to buy doesn’t have enough equity, you may not be approved for the rate lock. Other issues like rotting, water damage, or any sign of extreme wear and tear on the home are disqualifiers.
While a rate lock can never mean guaranteed loan approval, providing the above information to your lender and coming prepared with essential documentation will boost your approval odds and get you into your dream home in no time.
For more information about real estate, schedule a consultation with our financing specialist Rotem Levy at https://calendly.com/rotemlevy or give him a call directly at (818) 213 -1438.
Posted November 17, 2021
by Treeium Inc..