Personal
Finance: Tips on
Getting Your Mortgage Loan Approved
by: Chris
Rocks
What is important to lenders?
Not every applicant is
approved for a home loan the first time he or she applies. For a variety of reasons, even
after a lot of hard work, sometimes a loan just can’t be approved. It may have to do
with the applicant’s credit or savings history, employment stability, debt structure,
or the value of the home. The good news is that a denial is merely a detour, not a
roadblock. Purchasing a home takes planning, discipline and hard work! Follow these tips
and with our assistance, homeownership is not out of reach.
Establish a consistent record of
paying bills on time.
Before making a loan the size of a home loan, most lenders will want to review how you
have handled your credit in the past. This includes all credit accounts, including
utilities, revolving debt (credit cards, etc.), and installment debt (car loans, student
loans, etc.).
It is critical for you to bring
all overdue bills up to date immediately and begin paying them on time in a consistent
manner.
Establish a consistent record of
steady employment.
Lenders are more likely to look favorably on an applicant who has been in the same (or
similar) line of work for generally two or more years. If you have been working steadily
for less than two or more years, expect the lender to ask why. There are many acceptable
reasons, including:
You recently finished school, vocational training, or left
the military;
Your work is typically seasonal and gaps in employment are
customary to the industry
You may have been laid off from your job; or
Frequent employment changes are normal in your line of work
(sales, contract work, etc.), but you have been consistently employed and maintained a
consistent level of income over the past 2 years.
You may want to pay off some debt to lower your
debt-to-income ratio.
This step will make it
easier to qualify for a mortgage loan if your debt ratio is high. Chances are good that if
you’re already paying rent, making a mortgage payment will be a smooth transition.
Along with the mortgage payment, you’re also responsible for real estate taxes and
insurance, and if required, mortgage insurance and homeowners dues. Work with us to
determine the monthly payment you can afford based on your income and the standard
debt-to-income ratio guidelines.
Establish a consistent savings pattern.
Saving money for a down
payment, and still having enough reserves left over to cover two months of expenses in the
event of an emergency, is typically the most challenging part of buying a home. While
sometimes it is difficult, this is a necessary step to ensure you are financially ready to
take the plunge into homeownership.
About The Author
Chris Rocks is a Mortgage Consultant
specializing in working with First Time Home Buyers. FirstHomeTips.com, a site designed by Chris, was created to help make the
home buying process less complicated and less stressful for the first time buyer.
