Published on October 31, 2023
Improve your chances for mortgage qualification in today’s market
Admittedly, it has been a tough few years for aspiring homebuyers.
Rising interest rates are expected to remain elevated for the foreseeable future while home values have continued to rise. The typical home value in Michigan is more than $236,000, according to Zillow. In fact, statewide home prices rose by 7.3 percent year-over-year in September 2023, according to Redfin. With statistics like this, it is no wonder that the U.S. homeownership rate is only 65.8 percent.
Now for the good news. While high interest rates and high home prices are a challenge, especially for first-time purchasers, there are opportunities for aspiring homebuyers to realize the dream of home ownership. By working with Community Choice Credit Union, members have access to numerous lending options and to team members who provide a wealth of knowledge and experience in the mortgage sector.
The first step in securing a mortgage is applying for one with Community Choice. Mortgage loans are offered through our partner Member First Mortgage, a full-service mortgage lender with more than 50 years of experience. From fixed rate to adjustable, we offer a wide range of mortgage terms and rate options customized for your needs.
Here are a few steps you can take to put yourself in a position for a mortgage:
Increase your credit score
A higher credit score helps your chances of securing a mortgage. Studies have shown that consumers are more likely to get approved if they have a score of 620 or higher.
Reduce your debt-to-income (DTI) ratio
Try to keep it under 40 percent. A lower DTI indicates you have higher liquidity and access to cash, making you lower risk for mortgage defaults. The Lending team at Community Choice can help you assess your DTI and provide any recommendations for improvement.
Prove a reliable income history
You're more likely to be approved if you have been employed for at least two years at the same job, or if you have a solid and guaranteed income. Note that all income must be provable.
A down payment is generally needed. It is your commitment to the investment and reduces the amount you will pay monthly. Also, you will want to have additional savings available after the home is purchased for unexpected expenses. Lenders will want to see you have cash on hand for these items.
Pay off existing debt
Plus, avoid applying for new debt. This gives lenders more confidence that you will be able to afford your monthly mortgage payment.
Once you qualify for a mortgage, one of our experienced mortgage consultants will walk you through the best options based on your individual needs. Get pre-approved by filling out a mortgage application to get you one step closer to obtaining your ultimate living space.