When you apply for mortgage, a lender would simply want to see if you are capable of repaying the loan and how much of a risk you would be if he lent you the money. This means that he will definitely check your credit history that will reveal your repayment habits before he can approve your application. An advantage today is that you can seek online mortgage quotes. However, in any case there are a few factors that will be considered before a lender can approve your application for mortgage.
Factors lenders consider before approving a mortgage
Credit Score
If you have a high score you are likely to have lesser trouble getting your mortgage application approved. You must take up initiative to clean up your credit score if needed in order to get your loan sanctioned. As soon as you make an online mortgage quotes enquiry, the lender will want to take a look at your score before he can determine any quote for you.
Earning stability
Whether you are employed or not is also a factor that your lenders would consider. Your lenders want to be assured that you have a stable source of income. This means that they will receive their payments on time without you defaulting on them. They know that there may be exceptions but still these factors are important for them. If you do not have a secure job, you may have to face loan rejection.
Down payment
Another key factor to be considered when you have put forth your request for online mortgage quotes is the fixed amount of money that you can pay as the first deposit. You will also need to provide information about where this first deposit will come from. You need to specify whether it is a savings account, loan from a friend or investors or any other source.
Debt-to-income ratio
It is the ratio of the total income to debt payments. The higher this ratio is the better your chances of a loan approval. It is one of the most important factors used by lenders to determine approval. A lender obviously does not want to lend his money to someone who does not have enough income to pay off the loan. A ratio of 1.3 is good in the eyes of the lender. This means that you have 30% more money than what you need to pay off your loan. Sometimes, a lender will also approve your loan even if you have a low ratio provided you have other sources of income or assets.
Jessica Bennet is an experienced financial writer associated with Mortgage Fit Community. She has been guiding the Community through her writings on Online Mortgage Quotes, mortgage, loan modification and related financial topics. Her views and opinions shared in the forums have helped community members and guests get over problems in their mortgage.
Click the XML Icon Above to Receive Mortgage Articles Via RSS!
