3 Tips to Prove your Worth to a Money Lender

Considering a weakened market and rock-bottom interest rates, it might be tempting to buy a home. But before you take the leap, it’s important to take note of the fact that money lenders aren’t the same as they were a few years. They’re pickier than ever before – for good reason too.

So, here are 3 tips that will prove your worth to a money lender:

#1: Raise your Credit Scores

While this is easier said than done, having a score of about 740 will ensure that you get the best deals available. If you don’t know this already, the cutoff point is at 600 below which lenders won’t even bother looking at your application.

Even if you’re able to find a lender willing to do business with you, the costs will be noticeably higher.

#2: Prove that you have a steady income

Do you have W-2 forms to prove that you’ve been working for a period of 2 years? Then you will stand a chance to obtain a mortgage loan. There’s no doubt about – tax forms and pay stubs for at least two years are almost always requested by lender apart from any other type of income that you might benefit from.

And if you’re self-employed, be prepared to furnish more documentation about your income.

#3: Reduce your debts as much as possible

Most lenders have reverted to old-school debt-to-income ratio of 36%. While it is still possible for you to obtain a loan with a higher debt load, you’ll have to pay a higher interest rate as well. If you’re looking for a 45% debt-to-income ratio, then you’ll need to have lots of cash in the bank as well as a high credit rating to convince a lender. At 50%, you might as well give up.