Mortgage loan lenders are usually very picky on the kind of clients they choose to finance, and most buyers are turned off so quickly without wanting to find out why they did not qualify. In order for a buyer to apply for a loan and have high chances of being financed, information on what mortgage lenders look for in loan applications can be a great starting point.
Below are some of the most obvious things a lender has to check before they approve an application:
A steady paycheck is what a lender first confirms. A mortgage borrower needs to have a stable income and at least two years worth of tax returns. If under employment, the mortgage lender checks to confirm you can hold a good job and your payments are enough to make monthly submissions without any problems. If you’re self-employed, a well-documented business funding and a good reference can earn you that much needed mortgage loan.
Credit history is not only performed when moving into an apartment, but also when seeking a mortgage loan. Lenders check for a borrower’s credit history to determine their commitment in making payments and debt-to-income (DTI) ratio. Borrowers should ensure they pay off as much as they possibly can in debt before applying for a mortgage loan. It is also advisable to refrain from opening a new account at the time of applying for a loan.
Bank statements help lenders know there is enough amount to place for a downpayment. They are also a great eye-opener to show that you have been saving for the downpayment from previous records because to the lender this shows responsibility. It is also clear to them that the amount was not made available in your account simply because statements were asked for, showing signs of borrowing from other sources for the downpayment.
- Collateral is also important for the lender to use in case the borrower fails to make loan payments. This mainly is the house being bought and the bank determines how much the home is worth when borrower is unable to make mortgage payments. A lender has to sign in a collateral to protect their investment if things do not go as expected, as a borrower there is nothing much you can do about this.