The mortgage lenders of today have been doing this for so long time and have so much statistical data, that they know exactly what parameters you must fall into to qualify for their loans. Although each lender may have their own little tweaks to the system of analyzing all of your personal data, they may vary one to another some in this regard. If you get denied a mortgage loan from one lender, you may qualify with another.
If you ever get denied a mortgage loan from a lender, go back and ask them to clarify which areas of your loan application that you need to improve on to be accepted the next time you apply. It may be a small debt that you continue to carry that if you took the time to just pay it off, it would get the numbers to fall with in the lenders standards for you. The five basics of what a lender is looking for when you apply for a mortgage loan with them are the following:
1. Your Total Income. List all of the income you have coming in. If you are married and your spouse has income, you want to list your spouse's income on the application. The more income you can show on the application, the more debt you will be able to handle in the eyes of the lender.
2. Total Debt You Are Currently Carrying. You want to be very forthcoming on your application of all your current debt. This would be all such thing as car loans, credit card debt, credit union debt, etc.
They will list all of your current debts and come up with how much a month you are currently paying for the total of all your debt. They will compare your monthly income to your monthly debt payments to get an income to debt ratio.
3. The Amount You Need To Borrow For Your New Mortgage Loan. The amount of money you are asking to borrow for your new mortgage loan will come with a new monthly payment amount. Now that you are adding more debt to your other debts, will you be able to afford to take on the additional monthly payment in the eyes of the mortgage lender. Lenders usually have parameters of how much income to debt ratio for a mortgage loan they are willing to allow you. Additionally, they will have parameters of your total income to debt ratio, which includes all of your debt.
4. Your Credit Score. Do you have good credit or not. Good credit is extremely important when applying for a mortgage loan because without it, your chances are slim to none of getting your mortgage loan approved. The mortgage lender will get a credit report from at least one on the three main credit bureaus to see how well you have been doing making your payments on time with your current loan payments. Your credit history, another words. The three major credit bureaus – TransUnion, Equifax, and Experian – collect, maintain, and provide your report to landlords, businesses, and employers who need to check your financial responsibility. If you want to do your homework before applying for a mortgage loan, request a free credit report on your self and find out what is in your credit report before the lender does, just for your own peace of mind. Most lenders today have an up front fee you must pay for them to process your mortgage loan application. This can range from a few hundred dollars to over a thousand dollars. If you get a free credit report on your self and find out that your credit report is not very good right now, you may avoid applying for a loan at this time and save the cost of your application fee. The mortgage lender is very interested in seeing how well you have been treating your current lenders.
5. Your Identification. The mortgage lender will want to very your identification. Obviously, you know you are who you say you are, but with so much identity theft going on today the mortgage lender will want to verify that you are in fact who you say you are. Be glad they are doing this because if some one who has fraudulently taken on your identity has gotten a loan in your name, this is very bad for you for many obvious reasons. In today's credit environment, it is almost necessary that everyone belong to one of the identity theft protection agencies such as LifeLock, TrustedID, IdentityGuard, etc. For the small annual fee you pay for this service, the identity protection is invaluable.
Hopefully, this will give you some insight of what the mortgage lenders are looking for before you contact them.