Given the increase in the prices of homes right now, it’s natural that you would want a bigger mortgage. Now is the best time to do so, too, while the rates are still relatively low, even for jumbo mortgages and other loans in general.
That said, not everyone can get bigger mortgages. To increase your chances of getting approved for one, Dallas mortgage brokers, Now Frontier Financial, Inc., offers some tips for you:
Show Lenders That You Have More Income
Having more earnings can undoubtedly help get approved for a bigger loan. Does that mean you need a higher-paying job, or do you need to get a raise? Not exactly. In addition to your primary source of income, you can also show proof of other sources of income like:
- Investment dividends or interest
- Income from rental properties
- Child support or alimony
- Money from part-time jobs or side businesses (as long as you’ve been earning from this for the last two years)
Pay Off Your Other Debt
When applying for a mortgage, your debt-to-income ratio will be checked by the lender. This is the percentage of your monthly income as compared to your minimum monthly debt payments. Ideally, your debt-to-income ratio should be no higher than 36%, though there are some lenders that still accept higher DTIs. You can improve your debt-to-income ratio by reducing your credit card balances using a balance-transfer card. You can also refinance your auto loan to make the payment lower. Better yet, consolidate your debt into an installment loan.
Improve Your Credit Score
When you have a good credit score, you have a better chance of getting a larger loan, and it could even be with a lower interest rate. That said, the increase in the loanable amount is just to a certain limit. To improve your score, avoid maxing out your credit and make sure that you always pay on time.
Raise at Least 20% Down Payment
If you are planning to buy a home and you are able to raise at least 20%, you won’t need to pay for private mortgage insurance, so you might be able to get a larger loan. If you still have cash left after the 20% down payment, you should consider paying the lender upfront. This will not only let you qualify for a bigger loan amount; you get to save a lot over time, too.
Apply for FHA, 7/1 ARM, or VA Loan
A hybrid loan like the 7/1 adjustable-rate mortgage allows you to borrow more than what you would with a fixed-rate loan for 30 years. For instance, the 7/1 ARM lets you pay a fixed rate for the first seven years, then the rate changes. If you are comfortable with an ARM or if you intend to sell or refinance the mortgage before the seventh year anyway, you could choose this option to enjoy the lower interest rate with the bigger mortgage.
When you need to get a bigger loan, you need to work on being eligible for one. By following the tips shared in this post, you are increasing your chances of getting approved for a larger amount of loan. Show lenders that you have a desirable income. Then pay off your debt, improve your credit score, and raise at least a 20% down payment, and it will be easier for you too. Of course, you can always consult with Dallas mortgage lenders to know what you can do to get approved for their loans.
If you want to know more about home loans, New Frontier Financial Inc. is a mortgage company in Dallas, TX, that you can reach out to. Our loan specialists can answer all your queries and help you get the financial solution that you need for your new home. Call us at (469) 886-8300 to know more about our services!