Home Loan Qualification
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by: marciafreeman
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Prior to accepting an application for a home loan, lenders will qualify you for the mortgage. Some potential applicants may feel uncomfortable about this step because they dont fully understand what qualification for a home loan means. Qualification is the process lenders use to decide whether, and how much, to lend to an applicant. You can improve your chances of qualifying for the home loan you need by learning as much as possible about the process.
WHAT DO LENDERS WANT TO SEE?
Lenders look for evidence that you will be likely and able to repay your home loan. A consistent, dependable source of income is important. A minimum of two years with the same employer is commonly desired. If your current employment has been less than two years, a lender will look for other signs of stability, such as years with a previous employer or in the same field. Have you recently changed jobs? Can you demonstrate your reasons were responsible and that the employment is stable? Expect that the lender will contact your employer to confirm your history. The lender will look for evidence that you are responsible and have resources to repay the loan.
The lender will require a full disclosure of your income and financial responsibilities. By comparing what you earn against what you owe, the lender will be able to evaluate your ability to meet your home loan payments.
CREDIT WORTHINESS
Your credit report will be reviewed to evaluate the risk that you will make your mortgage payments regularly. Most importantly, lenders look for a history of consistent payments made on time. They will also be looking for evidence that you use credit wisely, staying comfortably below maximum levels.
STEPS YOU CAN TAKE BEFORE YOU APPLY
Start planning well in advance to prepare for home ownership. If possible, avoid making changes to your employment situation prior to seeking qualification for a home loan. Request copies of your credit reports from all three major credit bureaus and review them carefully. If any information is incorrect, write to the affected credit bureau to request correction or removal of errors. Also, because your debt to income ratio is directly related to your ability to qualify for a home loan, pay down as much debt as possible prior to making application. The more of these steps you take, the greater will be your chances of qualifying for all the money required for your home loan. Similar References Home loan rates
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