After you have purchased your first home, you may want to be able to afford a bigger mortgage. Lifestyle changes may make you want to get a larger house, or a job offer could take you to a part of the country where the cost of living is much higher. You can raise the mortgage amount through a few different methods.
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Lower your debt-to-income ratio by paying off credit cards, loans and other debts. When you pay off your debts, the ratio your lender uses to calculate your total mortgage eligibility goes down. This increases the amount you can borrow for a mortgage.
Increase your income. A higher income also serves to lower your debt-to-income ratio.
Provide a high down payment for the home. A higher down payment reduces the mortgage loan amount, allowing you to buy into a much larger home than you would be able to without the down payment.
Increase your credit score. Paying down your debt increases your credit score naturally, as well as paying all of your debt on time. The age of your accounts slowly increases your credit score over time. A higher credit score reduces the interest rate on your mortgage. If you can shave off some of your interest rate, you can get a bigger mortgage.
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