What are the Basic Requirements of a Mortgage Loan?

What are the Basic Requirements of a Mortgage Loan?

For every loan you will apply for, there will always be the requirements. When you lack one of them, there is a considerable tendency you will not get approved. Say, for example, home loans, there are many different types of home loans, but their basic requirements are the same. It may vary slightly, but the basics are there.

If you are planning on applying for a loan in any mortgage lender Plano, you have to prepare yourself beforehand. You need to know the basic requirements and ensure that you complete them, so your application will go smoothly. You may ask your chosen lender on the complete requirements they need from you. But as a heads up, here are the four essential things every lender will ask of you and which you need to comply on to get approved.

Your Credit Report

When you live in a credit-based country such as the United States, your credit report is critical. You have to make sure you build it properly, and you take care of it so you won’t have any adverse reports. If you are starting to build up your credit, it is best to take it slowly but surely. You have to make sure that you reach at least 640 since that is the essential requirement for many mortgage lenders. However, there are still a few that requires a higher score of around 680.

On the other hand, government-insured loans often require a lower credit score at 580. But one thing is common for all lender; they consider your history in addition to your score. If you have a bad credit report, it stays for seven years, and it dramatically affects your approval chances. So, be careful with your payments. Make sure you do them on time and with the right amount.

Your Financial Statement

Your finances say a lot about you. Lenders often scrutinize your finances to see whether they can approve you for a loan or not. They will look into your monthly income and check it with your expenses too. The purpose of this is to determine how much you can pay per month for your mortgage loan. They will also check on how diligent you are in making payments so better make sure that you pay your credit cards on time. It is also best not to have a negative or zero balance in any of your bank accounts.

Your Employment Record

Most lenders will require you to have a stable job with the same company for at least two years. There are others though that are somehow lenient and allows borrowers with different companies as long as it is in the same industry. You need to make sure too that you have an excellent employment record with your employer.

Your Down Payment

Your down payment is also necessary since most lenders will require you to pay at least twenty percent of the total cost of the house. However, other lenders might require less, but we do not recommend to go lower than twenty. When it comes to the down payment, it is best if you put down as much as you can so you will have a smaller principal to pay.

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