Mortgage Application Simplified: 4 Key Requirements in Getting a Loan

In getting mortgage for buying a house, borrowers need to consult lenders and have their applications approved. The same procedures follow whether a client prefers to get conventional, FHA or VA loans.

Through online searching, a person interested in getting a mortgage may feel overwhelmed with all the requirements that come with the process. The truth is an applicant only needs to understand four essential components of mortgage application, simplifying the application process on their perspective.

Credit Record

Credit record is the primary financial report any lender check. Even credit card providers look for a person’s credit record then decide how much credit limit an applicant can get. The same goes for lenders. They check clients’ credit scores and records then see whether they are eligible for a loan or not.

Credit score requirement varies across lenders. Lenders generally approve loans filed by people with good credit without problems. They know that people with good credit records have the money and responsible enough to settle their financial obligations. Lenders also give people with good credit scores perks in terms of interest rates. The higher the credit score, the lower the interest rates offered to clients. They can save a lot of money in the long run while paying cheaper mortgage rates.

Income and Income Source

Lenders check a client’s income source. A person should have steady income source to guarantee mortgage payments. Not only do clients must have income sources, they must also have verifiable income sources like work and business. This ensures clients can pay their mortgage while assuring lenders that clients are not engaging in any fraudulent activities that may victimize their business.

For mortgage lenders to verify income source, they will ask for paystubs or tax forms. Lenders will see the company listed on the stubs and forms then they can verify if the company is legitimate or not. They can check the company and see that the client is gaining steady income. As long as lenders don’t see inconsistencies on the funds received, they can expect loan approval from lenders without problems.

The amount of your income should also comply with debt-to-income ratio limits. This means your income should be enough to meet this limit and get your loan approved.

Work History

While income may weigh more for lenders, having a stable work is also important for lenders. But consistency is not the only thing that lenders look for. They want to see that you’ve been in the same work or company for at least two years. Even if you have consistently work employment from different companies, lenders will not be impressed with what you have.

For lenders, being in the same company for years means you have a stable work that will keep you financing your loans for a long time. Aside from having a stable job, working with the same company means you’re committed to your work and don’t have to worry about getting laid off from work.

Lenders will ask for multiple companies that prove your tenure at work. One is work certificate. Your company’s HR department should place the time when you’ve been in the company, your current salary, and work position.

Other Assets

Although you’re getting a loan, having additional assets will be beneficial for your application if you have other assets. Other assets mean that you have stable finances that allow you to get these assets. Moreover, many of these assets are obtained with loan. This means that you’re responsible in handling your finances, allowing you to get all the assets available for you.

Assets include other houses, cars, money, and a lot more. These assets will be beneficial for clients in getting loan approval. Lenders will be less ambivalent in providing loans with people with lots of assets because they know that they will have sufficient amount of money to cover for mortgage payments, even if things don’t go well with their work.

Regardless if you’ll work with a traditional or private mortgage lender, only these four things are the main elements that lenders will ask from you. This simplifies the process of loan application. Remember that other lenders may ask for other requirements, but these are the basic ones that will get loan processing started. Consult your chosen lender to find out their special loan application requirements.