Homebuying Tips

Buying a home may be the largest investment you ever make. When you apply for a mortgage, you may feel as though your fate is in the lender’s hands. You need to know the answer to the big question: Will my application be approved? You can feel far more comfortable about the answer to this question. If you know what lenders look for when reviewing applications. The driving force for lenders is confidence that loans will be repaid. They want to feel comfortable that the loans they make are safe, so they try to determine your ability and willingness to pay. Decades of lending experience have given the lending industry a pretty good idea of what borrowers can manage, and their experience is applied today in the form of Qualifying Ratios that are used to determine the amount of mortgage debt a borrower can typically handle.

Tips to qualify

1. Lenders look for stability in a borrower. Your past 2 years of credit history will have the greatest impact. See your credit for more info.

2. Regular lenders will look for no late payments over 30 days on rent or mortgages, and no late payments in past 6 months on credit cards. Credit problems over 3 years old may be OK if your recent history is solid.

3. Never prejudge your credit as too bad to get approved for a mortgage because most expert lenders can usually help you resolve difficult issues.

4. Lenders will generally look for a 2 year work history in your current job field. There are always exceptions, including having an education in the area you are working in, service on active duty military or changing job fields for an increase in pay.

5. To show more income to qualify, you can count part time, overtime, bonus income, commissions and self employment as long as it has a 2 year history.

6. If you are self employed, ask your lender about “No Documentation” loans. These loans may help you get approved because they do not require bank statements or pay stubs.

7. Find the right lender! If you’re having a hard time getting approved it may be that you have not found the right lender. Many lenders specialize in helping difficult loans get easily approved. If one lender says “No”, another may say “Yes.”

8. Co-Borrowers can sometimes help get you approved.

The loan program you select may help or hinder your approval. If you’re having a difficult time getting approved, ask for your lender’s advice. He or she may have a specialty loan program that may offer greater flexibility.