Four Tips to Ensure Your Austin Mortgage Loan is Approved

Buying a home is an exciting time. This is especially true when that new home is in Austin, Texas, home of exceptional live music venues, tasty food festivals, and dozens of museums and art galleries. Before you shop for a house, make sure you are taking four steps to ensure your Austin mortgage loan is approved. By eliminating the hassle of a rejection, you'll be in your Austin housing in little time.

Pay Down Installment Loans

Credit card debt can impact how bank looks at you. Before applying for a mortgage, pay off as much credit card debt as possible. Once you have paid down the cards, do not cancel them. Cut them up and don't use them, but canceling them can impact your credit score, so it's best to just leave them with a zero balance.

Be Proactive About Your Credit Report

There is nothing worse than hearing there is a problem with your credit report. When that problem is found by your lender, it's really bad. At least three months before you start applying for an Austin, TX, mortgage, check your credit report with the three reporting agencies - Equifax, Experian, and TransUnion. The government allows you go look over your credit reports every year free of charge. Just make sure you are using the government's official site - AnnualCreditReport.com - and not a site that asks for a credit card.

If you find problems, report them immediately. Credit card companies, banks, and other lenders have up to 45 days to investigate your complaint and mail their findings to the reporting agencies. The reporting agencies then have another 5 days to send you a response. As a result, FICO states it can take 30 to 90 days before those errors no longer appear on your credit report. Therefore, it's ideal to check your credit report approximately three months before you apply for a mortgage in Austin.

Don't Purchase More Than You Can Really Afford

People have grown accustomed to the thought that bigger or more expensive is better. Also look for a house that is in a comfortable price range. Beyond your mortgage, you may have homeowner's association fees, property/school taxes, heating and cooling costs, insurance, home repairs, and utilities.

If you make $2,000 a month after taxes and your mortgage payment is going to be $1,000 a month before all other expenses, money may be tighter than you figured. You have $1,000 a month left to cover all other home-related expenses, groceries, car expenses, and spending money. The Austin home loan company will take all of that into consideration when viewing your loan application, so you should too.

Get the Best Possible Bargain

One other factor that an Austin mortgage company considers is the appraised value of the home you are buying. If you are asking to borrow more than they feel the home is worth, it can be problematic. Ideally, you want the mortgage to be no more than 80 percent of the home's value. If the house is worth $200,000, you want the mortgage to be $160,000 tops. Not only does this help improve your chances of getting the Austin mortgage approved, but you'll also avoid costly private mortgage insurance (PMI) that can add hundreds to your Austin, TX, mortgage payment.