What we’re going to talk about today are the four main things that all banks and mortgage lenders look at when you apply for a mortgage today.
These are going to be the same four things regardless if you are a veteran move-up or first time home buyer.
Lenders want to know that you have established credit in the past, have demonstrated not on the ability but also the willingness to repay that credit as agreed and at the end of the day, lenders want to know what your credit score is because it can be a predictor of how likely you will be to pay back the borrowed funds. If you have no credit history then you may need to replan your approach on getting a mortgage because, with no proof that you are good with your money and repay everything on time, it can be difficult to get a good interest rate. While you plan what to do next, you can look for credit cards for no credit to help start building a score up for your future.
2. Capacity (employment)
The second thing that lenders look at when you go to apply for a loan is going to be employment. They want to know how long you’ve been at your job or in your industry, how you get paid, whether you’re a W2’d employee, self-employed or receive commissions, etc. and they want to know how much you make each month. If you happen to be self-employed, have a look through the options for the self employed mortgages. If you are self-employed, then you will need to make sure that your business is making a good profit before applying for a mortgage. Perhaps the best way to boost your profits is by speaking to a consultancy firm like sgi. Alternatively, if you happen to be a medical professional, then it is worth looking into mortgages specifically for doctors that you might be eligible for. If you qualify you might not have to pay mortgage insurance and may be able to apply for higher loan balance. For these reasons it’s worth looking into a physician loans mortgage and speaking to experts in this field.
The number they’re looking for here is your gross monthly income which is the number before taxes and any other deductions.
3. Cash /Funds to Close (savings)
The third thing that lenders look at when you apply for a mortgage loan is going to be your assets or how much money you have saved and of that money that you have available, how much can you comfortably apply to your down payment and closing costs and how much will you be left with after closing.
4. Collateral (the house)
The final thing the lenders will look at is the house or what is often referred to as the collateral because at the end of the day, after your good name, it is the house that will be the final guarantor of the loan, so the bank will want to know that the house is good shape, that it compares well with other similarly constructed homes and that there isn’t anything that would hinder it’s resale, such as unsatisfied liens from current or previous owners, unrecorded driveway easement or deferred maintenance to name just a few.