What Mortgage Lenders Are Looking For

Dated: 06/29/2017

Views: 245

Applying for a mortgage pre-approval can seem like an overwhelming task, as the lender will ask for a lot of information from you.  Here is what they 

need and what they are going to do with your information:

Employment History

Before a lender is willing to hand you hundreds of thousands of dollars to purchase a home, they want to be as certain as possible that you will be able make the monthly mortgage payment in addition to your other monthly expenses. They will ask you to verify consistent employment for the past several years and to explain any gaps in employment, especially if they are longer and/or occurred in the past year or two.

Credit History

Credit history is one of the most important pieces when applying for a mortgage. The lender wants to know how you use the credit that you have now as well as in the past. You don't need a perfect credit score; very few people have one. Not only is the FICO score looked at, but also the entire report from all three reporting agencies - Experian, Trans Union and Equifax.  They are looking to see if you are consistent about repaying debts, and that you don't have too much debt to be able to make your mortgage payments. Be prepared to give the lender your social security number, as they will need that to pull the reports. 

Enough Income

Besides employment, you must have a good income in order to qualify for a mortgage. Lenders create their own standards for income requirements, or they use federal guidelines for certain types of loans. The amount of money that can be borrowed is directly related to income and current monthly debt payments.  The more income and the less debt you have, the higher amount you can get for a mortgage loan. The lender will ask for recent pay stubs from your current employer, or business tax forms if you are self-employed or run a business. 

Reserve Money

No matter what type of loan you are applying for, buying a home costs money.  For most loans you have to make a down payment, which could be 3–20 percent depending on the type of loan. In addition you will have closing costs which could amount to  thousands of dollars.  A lender will request your bank statements, so they can verify that you have the money to close as well as a number of months of mortgage payments in reserve to protect you, and their loan, in case of job loss or a decrease in income. 

I've applied for  mortgage loans on several homes, and I know it can seem a bit intimidating. Hopefully knowing these four things and having your paperwork ready when you're ready to apply will make the process easier and smoother for you. 

Contact me when you're ready to purchase your new home.  I work with reputable and knowledgeable lenders and we are here to help you get into your new home as quickly and as easy as possible! 

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