What Do Mortgage Companies Look for in Your Loan Application?

1. What Do Mortgage Companies Look for in Your Loan Application? There is a risk involved in approving someone for a mortgage loan as there is no guarantee that the borrower will pay off the loan in time. That’s why mortgage companies look for certain key financial factors before approving your loan application to check your ability to repay. So when you have decided to buy a home, collected your documents, and ready to apply for a mortgage loan, make sure that you put your best foot forward and address all the essential factors that help you to qualify and get approval for a home loan. What are these factors? Credit History Your three-digital FICO credit score number is certainly one of the most important numbers for you. This number reveals how well you have managed your credit previously. Mortgage companies today consider a FICO score of 740 or above as a good credit score. Wondering how to get a strong credit score? Pay down your credit card debt and your bills on time.

2. When you apply for a loan, your lender pulls your credit report with FICO score. Your credit score contains information regarding your payment history and age of credit history which your mortgage lender typically review to determine your ability to pay back. Debt-to-Income Ratio This is another key number that your lender evaluates when you apply for a mortgage. Lenders prefer to work with loan applicants whose total monthly debt is not more than 43 percent of their gross monthly income. When you apply for a loan, your lender compares your debt to your total gross income. If you have a higher debt-to-income ratio, you may struggle to qualify for a loan. Income Stability Mortgage companies typically verify two years of employment history and look at how a borrower gets paid. This helps the lender to have a confidence that your income is stable and won’t disappear. So, your lender will verify your employment history before funding you a loan. If you are a business owner or a professional freelancer, your mortgage company will ask you for tax returns to verify your ability. Savings and Assets If you have some money available in a savings account, it will help you make more appealing applicant to the lenders. They look if you have savings in reserve to keep paying the mortgage if your fixed monthly income stops due to job loss or any other reason. If you are interested in mortgage loan and looking for the top mortgage companies in Salt Lake City, use these guidelines to increase your chances of qualifying and getting your loan approved. Source: https://medium.com/@communitylendinggroup2727/what-do-mortgage- companies-look-for-in-your-loan-application-a3de775ab068 Community Lending Group 1262 West 12700 South Ste A Riverton, Utah 84065