While it is always a good idea to leave yourself plenty of time to source the best possible home loan for your situation, sometimes circumstances just arise that require you to get access to a mortgage in a hurry — for example, you may unexpectedly find the perfect house, or have to move in a short time period for a career reason.
If you find yourself in the position of needing to get access to a loan quickly, or want to be prepared in case this happens at any stage, it pays to know the steps you can take to make the process more streamlined. Read on for three key strategies you can follow to help you get a quick and resounding “yes” on your next loan application.
1. Research a Variety of Lenders
One of the best things you can do to speed up the application process is not just apply for a loan with the first bank you hear about or the institution you currently bank with. Instead, make sure you conduct research on a wide variety of potential lenders, including all types of top mortgage companies, so that you can apply to the one most likely to approve your loan.
Different places have different rules and requirements when it comes to loans, after all, so your chances of success will be higher with some than others. Choosing the best fit for your situation the first time around will save you having to waste time applying to many other lenders.
In addition, keep in mind that these days there are lots of alternative lenders to banks. The non-traditional lending segment has growing rapidly over recently years to cater to demand (and due to the fact that bank lending has declined), and you’ll find that many of these lending organizations offer to approve loans in just hours or days.
2. Ensure All Your Paperwork Is Up to Date
Next, if you want to secure a home loan quickly, you must ensure that all of your paperwork is completed and up to date. Lending institutions almost always have to see a variety of documents before they will even consider approving a loan, so if you want to save time, have these prepared well in advance.
For example, you should have, ready to go, your personal tax returns for the past three to five years; business tax returns and financial statements (such as profit-and-loss reports and balance sheets) if you own a venture and need to use it as collateral; and paperwork such as pay slips, credit card statements, personal loan details, bank account statements, and student loan information. This way, lenders will be able to quickly see what current assets and liabilities you have, as well as your recent income and likely future cash flow.
The timeframe for approval is also likely to be decreased if you have already compiled all the necessary information on the house or unit you wish to buy before you approach a lender. Banks and other firms will want to know the price of the property; its valuation and possibly rental potential; as well as any information you can provide about planned renovations or other work you may wish to borrow funds to complete.
3. Pay Down Your Debts & Avoid Accumulating New Ones
Lastly, you will also dramatically improve your chance of success and reduce the wait time on a loan application if you pay down your current debts before asking a lender for money. When banks and other institutions examine your file to see whether or not you will be a good risk (that is, if you will always be able to make your monthly payments on time and in full), they almost always take a look at your credit score. The better your credit score, the better your chances of being qualified for a mortgage and enjoying a quick turnaround time.
One of the elements that makes up your credit score is the amount of money you owe to others. This covers various types of debts and loans, such as credit card debt, student loans, car loans, current property loans, personal loans, and tax debt. If you pay down your debts as much as you possibly can before applying for a loan, you will give yourself a better chance of having your application approved quickly.
Similarly, before you apply for a loan, and during the time that your application is in with a lender, you should also avoid accumulating any new debts. While you might think that buying a few extra bits and pieces on your credit card for the home you hope to purchase won’t make a difference, adding to the total amount you owe can potentially make the difference between a ‘yes’ and a ‘no’ on your application.