Applying for a mortgage is stressful, no matter what your income – but most people have similar challenges that make it even harder to secure a mortgage…
And in this post, we’re going to look at simple and effective ways to increase the chances of getting approved for a mortgage. Let’s start with the obvious:
Secure Employment
It sounds almost too simple… but securing employment is key, if you want to get accepted for a mortgage as a physician, and lenders – particularly in today’s financial climate – will closely scrutinise a potential borrower’s ability to pay back the money they’re trying to lend, before they reach a lending decision.
Note, that you don’t necessarily need to have actually began working your new job – for many lenders, a letter of employment can be enough – and being able to present this information to the lenders you’re applying with, can greatly enhance your chances of being accepted.
Save For The Down Payment
Most mortgages and home loans will almost always require you to pay a downpayment – although, if you use FHA or VA loan, the amount you’re required to pay is generally a lot less than you’d find in traditional mortgage lending.
Still, despite the low down payment figure, lenders like to minimize their exposure to risk – so the more you can put down as a downpayment, the more likely you are to be accepted. It’s worth thinking of this in advance, as – even a few extra months-worth of saving – could mean the difference being putting down a downpayment that’s accepted, and one that’s not.
Reduce (And Manage) Your Debt
Almost everyone over the age of 18 is in some form of debt – even if it’s just monthly cell phone contract obligations…
And while debt itself won’t harm your chances of being accepted for a physician loan, poor debt management will – and this is another key point that lenders look for, so it’s worth ensuring you are managing – and able to show – that you’re in control of your finances.
For example, one of the biggest contributors here is your credit utilization ratio (how much of your available credit you’re using.)
If a lender sees that you have a credit card with a $2,000 limit – but you’re only using $300 of that limit – they’ll summarize that you’re not in financial difficulty, and will likely meet your monthly mortgage repayments.
On the other hand, if your limit is $2,000, and you’ve used $1,900 of that limit – it can look as though you’re living on a month-to-month basis, decreasing your chances of being accepted for a mortgage.
Build Your Credit Score
Following on from the above, building your credit score is paramount to getting accepted for a physician mortgage (and getting accepted at a rate which you can afford, and are happy with) – and to help, we’ve put together a comprehensive guide on tips to increase your credit score.
Remember, while a credit score can change – lenders like to see at LEAST 3 years of fairly in-depth credit history…
So getting on the right track now – even if your score is shot – could help you later down the line, if you struggle to get accepted for a mortgage now, but want to try later on.
Use the techniques above
Of course, all lenders use different criteria – and there’s no “one size fits all approach” to getting accepted – but following the above should give you a great head-start, in the mortgage-acceptance world!