The holidays are a stressful enough time with family obligations, parties, purchasing the right gifts for loved ones, and balancing your finances. After big sales holidays like Black Friday and Cyber Monday you may be anxiously checking your bank account and scrambling to pay both holiday bills and monthly commitments such as your mortgage. Up […]
How To Know If You Qualify For A Mortgage
Congratulations! You have just taken a step into a new world with the decision to purchase a home. Before you can get a mortgage, you must be able to qualify for one. Lenders take into consideration many different factors when evaluating applicants like you.
To know if you may qualify for a mortgage, consider these factors:
You Are Able & Willing To Pay
The ability and willingness to pay on a mortgage will go a long way in determining if you will be able to qualify for a mortgage. You should have enough money saved up to not only cover your monthly mortgage payments, but other costs like:
You Have A Good Credit Score
Credit score is an essential part of qualifying for a mortgage. A good credit score shows that you are financially responsible and can get lower mortgage rates. A good credit score will also simplify the loan approval process and help you negotiate larger loans
Order a copy of your credit report from the major credit unions to see what your credit score is and how it can be improved.
You Have Stable, Consistent Income
Lenders will look at your income, including:
- Gross income
- Disposable income
- Discretionary income
Have at least 2 years of income records available to show your lender that you have a stable, consistent income. Lenders want to know that you will be able to pay back the loan as well as be able to pay other debts and daily finances. Your debt-to-income ratio should ideally not exceed 36% percent.
You Can Put Down A Down Payment
Sellers want to know that you will be able to put down a good down payment on the home. The traditional amount is 20% of the purchase price but there are some first time homebuyer programs that will allow you to put as little as 3-10% down.
Qualifying After A Foreclosure
If you have purchased a home in the past and foreclosed, you will have the ability to purchase again in the future. As a boomerang buyer, you must complete a waiting period and:
- Pay down your debts
- Reestablish your credit
- Set a budget
- Get pre-approved