Why Do The Following 3 Things Matter When Getting A Mortgage?
Qualifying for a mortgage is sometimes easier said than done, with mortgage underwriters looking at a variety of different things to see if you qualify. That's why it's important to know why the following three factors matter when applying for a mortgage.
Your Credit Score
Your credit score is essentially a measurement of how likely you will repay debts that you owe. While there is a number associated with your credit score, mortgage lenders are able to look at your entire credit report. They can not only see if you've had debts that you've struggled to pay in the past but what kind of debts they were.
For example, your mortgage lender can see if you've had issues paying back auto loans or student loans. If you've not paid a medical bill that has gone to debt collections, that type of debt will be noted as well.
Your Income
Many people think that if they can afford to pay for an apartment then they can surely pay for a mortgage. However, lenders look at income in a way that landlords do not. Mortgage lenders not only want to make sure that you can make the monthly mortgage payment but that you can do so without having financial hardship. This is a loan that you could be paying back for many years, so the lender doesn't want you struggling from month-to-month that entire time.
Lenders also factor in your debt-to-income ratio, which is a percentage of how much of your monthly income goes towards debt. They'll total up all your debts, the approximate mortgage payment you will have, and the average amount that you make per month. If the ratio is too high, then you would not qualify for a mortgage.
Your Potential Home
A lender also wants to make sure that the home you are buying is a sound investment. This means that the home is not overpriced and that it is in good condition. This is because the lender is responsible for the loan if you were to default on it. The lender would sell the home as a foreclosure, often selling the home as is, and hope to make back the remaining balance of the home in the sale.
Reach out to your lender for more information about what they look for when getting a mortgage. The explanation of why they look for things can really help you know how to prepare before you apply.
To find out more, contact a company like Clift Enterprises Clift Mortgage.
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