Finding The Right Loans

Finding The Right Loans

3 Vital Things Mortgage Lenders Look For When Evaluating Loan Applications

April George

Do you feel nervous about applying for a mortgage? If so, is this because you have experienced problems in the past trying to get approved? Getting approved for a mortgage is not always easy, but you might have a better chance of approval if you properly prepare for this event. To properly prepare, you should learn about the following three things that lenders look for when evaluating loan applications.

Favorable Credit

When you turn in your application, the lender may ask you to sign a consent form for a credit check. Signing this form gives the lender permission to run your credit, and it will be a hard inquiry on your report. A hard inquiry is different from a soft inquiry. You will see this inquiry on your credit report, and it gives a lender more information about your credit ranking.

Lenders look for favorable scores when evaluating loan applications. The score you need will depend on the type of program you use. If you have a high score, you will have more options with loan programs. If your score is lower, it may limit your choices.

Job History

Two, lenders look closely at job history. They want to see that a person has a reliable income from their job. To determine if it is reliable, they may ask to see your pay stubs. They will also want to see other forms of proof of income, including tax returns. Before approving the loan, they will also run an employment verification procedure. One key thing that lenders look for in this stage is the length of the job. They want to see two years of experience in the same position.

Debt-to-Income Ratio

The other essential thing to understand is a debt-to-income (DTI) ratio. Lenders always compute a person's DTI ratio because it reveals a lot. It compares the debt you have to the income you earn. Lenders will not approve and issue loans unless your ratio is low enough. The number they look for is usually around 36% or less. A 36% ratio means that you use 36% of your income to satisfy your debts. If your ratio is higher than this, you may experience problems paying your bills on time.  

While these three things are essential to lenders, there are additional steps they complete before offering approvals. If you are ready to apply or have questions about your options, contact a home mortgage lender today.


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Finding The Right Loans

When you start thinking more seriously about how to manage your finances, it is worth saying how important it is to find the perfect loan. While the right loan could help you to pay down debt without worrying a lot about the repercussions, the fact of the matter is that some people don't research loans as extensively as they should, causing problems. The purpose of this blog is to find great loans that could help you along the way. Check out these posts that talk about everything from narrowing down loans to identifying ways to identify lower interest rates. Check out this information to make sure you have what you need.

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