What Do Lenders Look For When You Apply For a Mortgage?

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If you’ve made the decision to become a home owner because home prices today are so very low, as well as mortgage rates being very, very low, you are probably making a very wise choice. Becoming a homeowner is something many people strive for, and if you are in a position today to join the ranks, then congratulations!

It is possible that while you want to buy a home, the whole thought of getting a mortgage is a bit overwhelming for you. Especially when you consider all the negative news about the mortgage crisis, the sub-prime melt down and the whole global economic recession being largely blamed on mortgages and the mortgage industry. With all that negativity, it’s understandable that a first time home buyer might be a bit reluctant to jump in.

Rest assured that if you qualify for a mortgage in today’s market, you are getting involved at what many experts would say is an ideal time. Low rates, low prices… it doesn’t get much better than that!

What determines whether or not a you qualify for a mortgage? There are a number of things, but we’ll outline a few of the basics here.
Your income. A lender is going to want to see that you have a stable income. Your mortgage payment will be due every single month and if you haven’t proven that you can hold a job with predictable pay for at least a couple of years, a lender isn’t going to want to risk lending you tens or even hundreds of thousands of dollars.
Along with your income, the lender is going to look at your debt. If you already have a ton of debt, that means that a lot of your current income is already committed to other fixed expenses. Adding to those expenses with a mortgage might prove to be more than your budget can handle.
Your credit. This is a huge part of the equation. Why? Because it shows how well you ‘ve been able to handle loans provided to you in the past. If someone lent you money, did you pay them back in full and on time? If you have a track record of NOT doing so, no one is going to be very interested in lending you their money. It would appear that there is a good chance you wouldn’t pay them back on schedule either, so they’re not interested. On the other hand, if you HAVE shown that you can borrow money and be responsible about paying it back as promised, then your track record is appealing. The lender will feel more comfortable putting their money in your hands because you seem likely to pay them back. Many people think that never borrowing money shows that they’ve never needed it, and that’s a good thing. Don’t make this mistake! A lender want to see proof that you can and HAVE borrowed (and paid back) money. They don’t want to be the first to take a chance on you. And they probably won’t be. If you don’t have any credit, it will be difficult to get a Dallas home mortgage, or any mortgage for that matter.

So, in a nutshell; make sure you have a history of good, predictable income without too much debt already that eats up all your monthly earnings. On top of that, show that you are capable of borrowing and paying back on loans.

If you do these things, there is a good chance you will qualify for a home mortgage. And again, with these low rates and the fact that many homes are priced to sell, you’ll be in very good shape.
Making the decision to get a mortgage is a big one. Borrowing tens of thousands, or more like hundreds of thousands of dollars, knowing that it’ll take you 30 years to pay it off, isn’t something one takes lightly. That is why it is Dallas Refinance Guide was put together. To gather useful information to help people like you, whether you’re looking to get your first ever home loan or if you’re looking to refinance your existing mortgage. We hope it serves some purpose for you.

June 4, 2009

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What Do Lenders Look For When You Apply For a Mortgage?

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