How You Can Get Approved for a Mortgage Loan in Denver
Purchasing property is one of the smartest financial decisions that you can make, but it doesn't happen overnight. Between the property showings, financing solutions, and paperwork, there are a lot of moving pieces in the home-buying process that can take a long time. And one of the most important steps you'll need to take is getting approved for a mortgage loan in Denver.
But how does the approval process work? What do lenders check and evaluate when considering a home loan application? And what can you do to improve your chances of securing financing for your home purchase? Don't worry: Blue Pebble has all the answers to your mortgage questions whether that’s in Colorado or anywhere nationwide!
Understanding The Process for Home Loans
If the thought of a mortgage feels stressful, overwhelming, and complicated, it's okay: you're not alone. A 2022 study found that nearly half of prospective homebuyers within the 30-something age range have delayed their decision to purchase a home because they're worried about falling into debt. Many aspiring to own a home have also punted on the idea because they're intimidated by the financing process and others simply can't get approved for a mortgage.
While buying real estate can be challenging and confusing for many, it's not as complicated as you might think. You can break down the mortgage process into a few key steps:
Get a Pre-Approval Letter - This document states that a lender has reviewed your financial information and is willing to provide you with a mortgage loan up to a certain amount. It is not always required to have pre-approval when buying a home, and we always recommend that you get one because it shows you are serious about the transaction, and it gives sellers confidence in your ability to close.
Shop for Your Next Home - This is the fun part of the real estate process! Once you've toured several homes with your agent, you'll need to put in an offer.
Apply for a Mortgage - After finalizing your loan application, you'll receive a "loan estimate" within three business days, which presents your home loan information in an easy-to-read format. If you want to accept the loan offer, it will then be processed, and your lender will verify the information you've provided to them. (This is also when you get to submit your personal documents including proof of income, tax returns, bank statements, etc.)
Underwriting - Mortgage underwriters will check every aspect of your application and may conduct appraisals on the property to determine if the amount you'll be lent is sufficient for the sale.
Close on Your New Property - With your mortgage application approved and the home getting through your inspections, you and your agent can proceed with closing!
Increase Your Chances of Getting Approved for a Home Loan in Denver
When you've found the home of your dreams, the last thing you want to hear is that your mortgage application has been rejected. Fortunately, these key tips will help improve the likelihood that your application will be approved.
1. Maintain a Good Credit Score
Credit scores are numerical ratings from credit bureaus that communicate to lenders how reliable you are at paying bills or debts on time. A poor credit score may not automatically lead to mortgage denial, but it can impact the number of lenders and rates that are available to you. To improve your credit score and maintain a good rating:
Make timely payments on credit cards and debts
Catch-up on past-due accounts
Pay down existing debts as quickly as possible
Dispute credit report inaccuracies
Limit how often you apply for new accounts
2. Go Big with Your Down Payment
With a larger down payment, you'll be able to reduce your loan-to-value (LTV) ratio, which is an assessment of lending risk. If your LTV ratio is high, then your loan becomes high-risk, and you'll likely have a higher interest rate, too. But, if your LTV ratio is low, then it'll be easier to qualify for a lower loan amount and a better interest rate.
Here's an example: Let's assume you're buying a house for $100,000 and you put down a 20% down payment, which means your mortgage would be $80,000. But, if you put down a 40% down payment, your loan would now be $60,000 instead. This is a better situation for both you and your lender because there's less risk involved, your monthly payments will be smaller, and you'll accumulate less interest over time.
Think of it like this: the more money you set aside for your down payment, the easier it will be to qualify for your loan amount.
3. Reduce Your Monthly Spending
Review your budget for the next few months and ask yourself: "What regular costs can I reduce or pause while applying for my mortgage?" By temporarily reducing your monthly spending on things like clothes, subscriptions, travel, and social activities, you can save more for your down payment. And a bigger down payment will help improve your likelihood of getting a mortgage loan in Denver (and anywhere else). In addition, your reduced spending habits can also improve your credit score over time.
4. Avoid Taking on New Debts Before Applying for a Mortgage
Have you been itching to trade in your car for a newer one? Or do you need to leverage a "buy now, pay later" service like Klarna for an expensive procedure or purchase? If so, it's likely not a great idea to apply for a mortgage at the same time.
Taking on new debts while you're waiting to be approved for a mortgage can flag you as a risky investment for your lender. They'll spot those new debts when running a credit check on you, so think carefully before making any large purchases.
5. Work with a Reliable, Local Lender
In the real estate industry, it matters who you work with. No two mortgage brokers are the same! They can vary in terms of local market knowledge, experience, lending options, rates, and much more. You should strive to find a mortgage expert who has your best interests in mind.
At Blue Pebble Group, we provide an integrated brokerage model that's designed to lower transaction costs and help you save money on real estate. When you buy with Blue Pebble Homes and apply for financing through Blue Pebble Loans, you'll automatically qualify for our discount mortgage program. Our team can help lower your interest rate or reduce your closing costs to save you THOUSANDS of dollars.
Apply for Your Mortgage Loan in Denver Today
Make the right choice for your real estate goals and unlock the power to say YES with the Blue Pebble Group. Our integrated brokerage can help you find significant savings on your next home purchase in and outside of CO!
Contact our team today to learn how much you can save with our discount mortgage program.