What Mortgage Lenders Look For?
Mortgage Q&A: “What mortgage lenders look for?”
While this is a bit of a broad question, most banks and mortgage lenders are looking for the same basic thing, your ability to repay the home loan.
Keep in mind that this differs from the priorities of some loan originators, who are more concerned with your ability to qualify for a loan (so they can get paid), as opposed to actually being able to afford it.
Before your loan application is submitted to a bank or mortgage lender, it is imperative to ensure that every possible red flag has been addressed. Typically, borrowers know what these issues are, but if you don’t, consider shortcomings in asset, income, and/or credit departments.
Ultimately, you want your loan application to be strong as possible and to make sense so approval will be the only option; underwriters tend to love common sense.
If you don’t check your credit score before applying for a mortgage, the deal could be DOA, so know where you stand before looking to purchase or refinance.
If you don’t have seasoned asset reserves, your application may be declined or scrutinized further; so take care of your banking details at least a couple months before applying.
Same goes for income; if you haven’t had steady work for two years, the underwriter will have a much better reason to deny your application. If you’re self-employed, make sure your business that’s making you all that money is well organized, at least on paper. That means having something as simple as a business phone number, assuming you’re bringing in thousands a month; disorganization can cost you there.
If occupancy is a concern, make sure you have the documentation to back it up; if you’re downgrading to a smaller home, you better have a great narrative in place. Unfortunately, some things may be out of your control, like issues tied to the actual property.
Perhaps some aspects of the home aren’t up to code, or the value just isn’t there (appraised value); if that’s the case, you may be out of luck regardless of how well prepared you are.
One advantage to working with a loan officer/mortgage broker is that they can prepare your loan file before it ever gets to the mortgage company, so many mistakes can be avoided.
Keep in mind that even the smallest detail could cost you the deal altogether, so it never hurts to go over the loan file another time (with the help of a loan processor) to ensure everything is ship shape.
There’s never any guarantee, but the more preparation you put into it, the better off you’ll be.
