How to Qualify for a Bigger Mortgage
Perhaps you began the home buying process backwards and started LOOKING at homes before you pre-qualified yourself for a loan.
Now you’ve found that none of the homes in your price range will measure up. What do you do?
Here are four things you can do to qualify for a bigger mortgage.
- Reduce long-term debt.
- The first thing that Lenders look at is your income-to-expense ratio.
- They compare how much money you have coming in against how much money you have going out every month.
- Pay off car loans, credit cards, or any other obligations against your income, you’ll have more money to spend on a loan – and a Lender will let you borrow more money.
- Wait until you get more income.
- If you have more money coming in, you can borrow more money.
- If you’re expecting a raise within the next year, maybe you should wait until that comes through, before asking to borrow money for a new home.
- Add someone else to the loan.
- Another way to demonstrate to a Lender that he will be repaid is by having someone (with a good income and stable job) co-sign on the loan.
- This way, the Lender is looking at MORE income available to repay the loan.
- Use financing that requires lower down payments.
- The more money you have available to spend, the more money that a Lender will let you borrow.
- You’re trading off having the money available NOW or later. If you put a large down payment on a home now, that means you may have less income available to repay a loan later.
- By the same token, if you make a smaller down payment, then you’ll have more money available to repay a loan – and the Lender is likely to let you borrow more.