What Will a Lender Consider When Reviewing Your Mortgage Application?
If you are in the early stages of purchasing (or planning to purchase) a home, you’re likely wondering whether a bank will approve your mortgage loan application. It can help to get pre-approved before you even start house hunting so that you know exactly the loan amount you’ll be able to get and, in turn, how much house you can afford.
But what will the lender look at when considering whether to approve you? Most will take into account these factors:
- Credit score: The higher your credit score, the more likely it is you will be approved. Your credit score is affected most significantly by factors like your payment history, your total credit utilization and the length of your credit history — although there are some other, smaller factors that can impact your score as well.
- Income: How much money you make is not as much of a factor in determining whether you’ll be approved for your loan as your expendable income is. You must have sufficient income to cover your monthly mortgage payments in addition to the various other financial responsibilities you have, such as student loans, car loans and general living expenses. You should try to find a property whose mortgage payments, insurance and property taxes add up to less than one-third of your monthly income.
- Other loans: Do you currently have other long-term debts for vehicles or student loans? Lenders will look at these payments and determine if they could hinder your ability to pay back your mortgage.
- Down payment: The more of a down payment you can make on your home, the better your chances of having your mortgage application approved. A good rule of thumb is to try to put 20 percent down.
A skilled Virginia real estate lawyer can provide you with more tips to improve your chances of a successful mortgage loan application. Contact an experienced Charlottesville real estate attorney at Miller Law Group, P.C., either online or by calling 434-218-3987.