3 Major Things Your Mortgage Lender Will Look At
If you are thinking about buying a house, you could be a bit worried about the intensive process of applying for a mortgage. After all, you might have heard that getting a mortgage can be a lot more difficult than getting other types of credit, such as a car loan. If you are wondering what your mortgage lender is going to look at when looking at your application, you should know that he or she will look at a range of things. These are some of the major things that will be used to help determine whether or not you qualify for a home loan.
1. Your Credit Score
Unfortunately, your credit score is important when it comes to buying a home. Even though there are some programs out there that are designed to help people with less than perfect credit to own homes, many lenders are actually quite strict when it comes to credit scores. Therefore, if you have a little bit of time before you will be purchasing a home, it's a good idea to do what you can to improve your credit rating before you apply.
2. Your Income
Of course, your mortgage lender is going to want to make sure that you can afford your monthly house payments before you will be granted a loan. Therefore, you can expect for your lender to look at your income. The amount of money that you make will be looked at when determining whether or not you qualify for a loan and how much of a loan you can get. Your lender will also want to look at how long you have had your job and how secure your job is. You may need to provide tax returns, paycheck stubs or bank statements to prove your income, and your lender might contact your employer to verify your employment.
3. Your Debt-to-Income Ratio
The amount of money that you make isn't the only thing that a lender will look at. Your lender will also look at your debt-to-income ratio, which basically means the amount of debt that you have in comparison to your income. If you have a lot of credit card bills, student loans, car loans or other obligations, this could get in the way of you buying a home or could mean that you qualify for a lower mortgage than you would normally qualify for with your income.