4 Things Mortgage Lenders Look For
posted in Mortgage News
It can be helpful to know what mortgage brokers look for when assessing mortgage applications, as you may be able to take steps to ensure that you meet their criteria and get access to a great deal.
Working with a local mortgage broker is also a fantastic way to make sure that your application is viewed favorably by lenders, and here are 4 of the most important factors lenders consider when reviewing mortgage applications, whether you’re a veteran mover or first-time buyer:
- 1. Your credit score
Your credit score is a good indicator to lenders of how likely you are to pay back the borrowed funds, and if you have no credit history, it might be worth replanning your approach to getting a mortgage, as without proof that you’re sensible with your money, it could prove tricky to get a good interest rate.
- 2. Your employment
Lenders will want to know how long you’ve been in your current position of employment, or employed within that industry, along with whether you’re a W2’s employee, self-employed or receive commissions etc. They’ll also want to know how much money you make a month.
If you’re self-employed, you can discuss your mortgage options with a local mortgage broker, but ideally, your business should be making a good profit before you apply for a mortgage. One way of boosting your profits is by talking to a consultancy firm, or if you’re a medical professional, you might be eligible for a mortgage designed specifically for your industry.
Your gross monthly income is the number lenders will be interested in, which is the amount before taxes and any other deductions.
- 3. Your funds
Your assets or how much money you’ve managed to save is another thing that lenders will look at, along with how much of that money is available to you and how much can be comfortably applied to your down payment, and closing costs etc.
- 4. The property
Finally, lenders will almost certainly take into account the property you plan to buy, otherwise known as collateral. As it’s the property that will be the final guarantor of the loan, the lender will want to know that the house is in good shape, that it compares well with other similarly constructed homes in the area, and that there’s nothing to hinder it’s resale, such as unsatisfied liens from current or previous owners, unrecorded driveway easement or deferred maintenance, for example.
Mortgage lenders are by no means monsters that will do everything they can to prevent you from buying a home, but if you want to get a good deal on a mortgage, it’s important to understand their criteria and to do as much as you possibly can to make yourself a good mortgage candidate. For further guidance applying for a mortgage, schedule a consultation with a mortgage broker.