Category — Mortgage Application

Most new homeowners are quite careful about their spending and credit in the months and years leading up to a home purchase. Homeowners budget and save, and avoid making unnecessary credit inquiries in order to qualify for a home loan. What many people don’t realize is that qualification doesn’t equal a successful closing. When you’re buying a new home, make sure you preserve your financial status all the way through closing to make sure you don’t compromise your loan.  

Mortgage applications ask for a lot of detailed information about your current employment, former employment, previous residences and income information. When you’re trying to get a home loan, you may be worried about how you answer a mortgage application, and want to present yourself in the most favorable light possible. Don’t fudge on your mortgage application, though; in addition to being a federal offense, it can result in your application being denied. 

When you’re applying for a home mortgage, you’ll need to provide lenders with a full, detailed list of your assets and liabilities. Assets include all of your financial resources, such as retirement accounts, existing real estate and savings accounts. Liabilities include every credit card, every outstanding loan and even medical bill payments. Are you prepared for this disclosure? 

The financial industry tagline is “Shop around.” Every information source everywhere tells you to never take the first loan, savings account or financial instrument you see. You can’t make an informed decision until you’ve evaluated what’s available, and compared what you’re offered with what you could get. Does the same generalization hold true for mortgage applications?  

As the economy and the housing market started to tumble, combined with a significant increase in the unemployment rate, we sat back and watched as the mortgage lenders were the next domino to fall. With more and more mortgage lenders closing up shop, the ones that were left standing in the rubble started to tighten lending requirements.

So what does the new mortgage lending horizon look like for borrowers? What should you expect?

Lift Your Income to Qualify for Your Dream Loan

Income is a big factor in determining whether or not to issue you a loan. Loan calculations take into consideration your total debt, housing debt and the ratio of these numbers to your gross income. If your numbers look too high, you can always lift your income in order to qualify for the mortgage for your dream home.

Reduce Debt to Qualify for a Bigger Loan

The total debt ratio is one of the key factors that a lender considers when determining your loan eligibility. If your total debt ratio is high, you can always reduce your debt in order to make your numbers look better, and get the approval you want for your dream loan.

If you are ready to submit your mortgage application, you are likely wondering which personal financial factors are going to be taken into consideration. In addition to a variety of financial documentation required to substantiate portions of your mortgage application, lenders will review your personal credit report carefully.