Getting a mortgage can be a daunting task, especially if you are unaware of what the lender looks for in your application. A lot is being said and done about the perfect mortgage application, but a wise applicant needs to differentiate the facts from the myths. Getting pre-qualified is an advantage when you are seeking house sellers or real estate agents. This will also give you an idea about how much you can afford to spend on your home or property.
To find out what the mortgage lenders will look for in your application, read on…
Your Ability to Repay
The first and foremost thing that the lenders look for in your application is your ability to repay the loan. Although it may sound quite easy to determine how much can you pay towards your mortgage every month, it is not just about subtracting your expenses from the income.
Any reputed Seattle mortgage lender will need to look into a lot of things besides your payslip and expenses such as your savings, investments, insurances, assets, outstanding debts, and more. One of the popular mortgage lenders in Seattle is Sammamish Mortgage. They have been successfully serving Seattle and its neighboring areas since 1992. You can contact them today to get a quote.
Your Willingness to Repay
Lenders only want to grant money to those applicants who are committed and exhibit a willingness to repay the mortgage. To gauge your willingness, they’ll look at all your past and current debts and were you are able to repay the creditors on time. Many lenders will also check if you’ve ever missed any repayments in the past or delayed them. In short, only those applicants who have good credit ratings will be accepted by the lenders.
Your credit reports and score will be looked at by the mortgage lenders. Your rating will determine the kind of mortgage you are eligible for. Also, it impacts the rate of interest you’ll be charged on the borrowed funds.
Your Outstanding Debts
To get a pre-approved mortgage loan, you need not have zero outstanding debts. The lenders use the debt to income (DTI) ratio to figure out whether you have the ability to repay the existing debt and handle a new one. DTI is the comparison of the income you earn versus the outstanding debts. Thus, make sure that you do not owe huge funds while applying for a mortgage loan.
Your Income or Wages
You’ll need to have proof of your income such as payslips from your employer to get qualified for the loan. For all those who are self-employed, the lenders consider their gross income.
If you’ve been out of work for the last two years, then this could impact your eligibility to get the loan. Lenders review your employment history, and some may even call your employers to verify your current employment status. They’ll also check your monthly and annual payout. In case the applicant has changed jobs in the last two years, the lenders will contact those companies as well.
Assets You Posses
The lenders will need your bank and investment account statements. This will help you to prove the money you claim to have. They’ll also want to know if you hold cash reserves. In the case of recent large deposits in your account, the lenders may want to know in detail about them as well.
The Down Payment
Usually, mortgage loans do not require the eligible applicant to pay any down payment. However, if you are asked for a down payment, then the lender may fund up to 90% of the purchasing price.
Can a Mortgage Application be refused?
Yes, there are many reasons why your mortgage application can be declined. Some of the reasons are mentioned below:
- Not enough income or higher expenses
- The lender thinks you cannot afford to repay the loan
- The size of the mortgage is higher than your budget
- No guarantor for your mortgage
- Bad credit rating
To conclude, always make it a point to work with a trusted mortgage lending company to avoid your loan application being rejected and avoid any hidden charges. They will help you all the way with the transactions and make it possible for you to own your dream home.
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