Top Tips for Qualifying for Home Loans in Encinitas, CA

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Top Tips for Qualifying for Home Loans in Encinitas, CA

Here’s the thing that every borrower should realize: not all those who apply for home loans in Encinitas, CA, get approved. According to the data published on the National Association of Realtors website, in the last five years, the rate of mortgage loan approval in California was just 59.49%. That means 4 out of 10 got rejected.

If you plan to apply for home loans in Encinitas, CA, do your homework to increase your chances for approval. Here are some tips that you may find helpful:

Improve your credit score. In general, this factor is what lenders consider when assessing a mortgage loan application. So, before applying, make sure you have a healthy credit score. If you think it is not good enough, try to improve it before you reach out to a lender for applications. Some things you can do to improve it are making on-time payments of your financial obligations, keeping balances low, and limiting new credit applications.

Lower your debt-to-income ratio. It is the ratio between your total monthly debt and gross monthly income. Why do lenders find this crucial? Because they would be able to gauge your ability to manage the payments you make every month. At the same time, it provides a helpful idea of whether or not you can still afford to pay for a loan, given your current monthly obligations. In general, lenders would like to see debt-to-income ratios that are 30% or lower. Yes, the lower, the better.

Put a larger down payment. The advantage of paying higher amounts for a down payment is that it reduces your loan-to-value ratio, which also helps improve the likelihood of getting the best mortgage interest rates. Generally, a 20% or larger down payment is ideal, as it also means you will not be subject to a mortgage insurance requirement, saving you a good amount of money.

Are you looking for a reputable mortgage company to help with your home loans in Encinitas, CA? Look no further than Homeplus Mortgage. Contact us today at (800) 958-7587 for your inquiries.