How to Get a Bigger Mortgage
Increase Your Earnings
One of the best ways to qualify for a bigger mortgage is to make more money. You do not need to rely on asking your boss for a raise because there are other ways to increase your earnings. If you own a rental home, make sure you include it on your application. You can add money that you get from any investments you make as well as child support or alimony payments you receive. If you have free time, consider working part-time on weekends or at night.
Improve Your Credit
The average credit score in the United States is 698, but this number can vary between states. When you apply for a mortgage, the lender will pull your credit and look at both your score and your overall history. You will not get approved if you have accounts you defaulted on in your past or if you have one or more judgments. Lenders want to make sure that you will pay your loan on time, and they won’t have to take back the home. When you improve your credit score, you may find that your lender will offer you a bigger loan with better terms.
Make a Bigger Down Payment
Buying a home usually requires that you make a down payment. Your lender may ask for as little as 5%, up to 10%, or more of the home’s purchase price for your down payment. If you make a lower down payment, the lender will often require that you have private insurance because you owe more than 80% of the home’s value. You can only switch to a different type of insurance once you pay down your loan. When you make a down payment of 20% or more, you gain more equity in the home. This can result in lower monthly payments or a bigger loan.
Use a Co-Signer
At Thrive Lending Group, we help you see how much you can afford on a mortgage before you apply for a loan. Using this tool is a good way to see if you qualify for a loan and how much you might get as well as your monthly payments and interest rate. Don’t worry if you don’t qualify for as much as you thought because you have the option of getting a mortgage with a co-signer. Your co-signer needs to have both an income source and a credit score equal to or higher than yours. Lenders will look at your combined income and should offer you a bigger mortgage. You can take the person’s name off your mortgage later without affecting your loan.
Put Away the Credit Cards
Many people get in the habit of using their credit cards for most purchases because they earn reward points or cashback bonuses. When you plan on buying a home, hide those credit cards and stop using them for a few weeks before you apply. Your ratio of income to debt is a big factor in the size of the mortgage you get. A lender who sees that you owe almost as much on your credit cards as you make is less likely to approve you for a loan. When you have low balances on those cards and rarely use them, lenders are more likely to give you a bigger mortgage.
Pull Your Credit Report
You may not realize that mistakes on your credit report prevent you from getting the home loan you need. Consumers have the right to get a free copy of their credit report once a year. If you use all three bureaus, you can pull your report more often without paying a fee. Look for any errors or issues that affect your credit, such as an account you closed that still shows as open or a hospital bill you paid off that is still on your report. Contact each bureau or agency and request that they remove it.
Apply With a Guarantor
A guarantor is similar to a co-signer in that they do not have to live in the house with you. Many people use their parents as a guarantor, especially if their parents have a high credit score. The guarantor essentially tells the lender that they are responsible for the loan. If you fall behind on your payments, your lender has the right to go after the guarantor for both the missed payments and the entire mortgage if you walk away from the property. The guarantor has the right to sell the home through a short sale or give it to the lender to avoid a foreclosure. You can use anyone with good credit as a guarantor, but lenders will look at their financial history. If that person has better credit than you do and is willing to complete the necessary paperwork and take on the risk, you should qualify for a bigger mortgage.
Buy the Perfect Home
You don’t need to move out of the area that you love or buy a house that doesn’t meet your needs because you qualify for a low mortgage. There are multiple ways to get a bigger mortgage, such as making more money or applying through a special program. Contact Thrive Lending Group in Garden Grove, CA today to learn about our education programs and how you can get the right home loan for your needs.