Acquiring your first home is an exciting yet nerve-wracking journey, especially if you have to seek the right mortgage lender who can provide you with the financial assistance you need. Not all mortgage lenders are the same. Each has its unique terms and conditions. Moreover, not all can provide you with the financial support that you can meet.
Finding the right mortgage lender is already a challenge to overcome on its own. Still, the journey never ends there. Once you find your ideal mortgage lender, you also need to ensure that you meet their criteria and pass their evaluation, which can be worrisome for many. While lenders have different methods of providing their loan approval, they share some general factors that can help you assess if you are a good match for their roster of clients.
Let this article tell you about some factors that mortgage lenders consider before accepting applicants’ loan applications.
The Credit Report: What Mortgage Lenders Look At
If there is one thing you need to be prepared for in terms of a loan application, it should be your credit report. Obviously, the credit score is one of the most critical factors in a credit report that would determine whether you can manage your debt. If you have a good score, you have a better chance of acquiring the loan.
However, if you have low credit scores, you might not have a smooth application process. Should you have a low credit score, do not get discouraged easily. Not all loan providers say no to applicants with a bad credit score. They also assess other factors before they decide if they would allow you to borrow their money or not. Here are some different elements they look into:
Do you have any other recent loan applications? Before deciding whether or not they would approve your loan application, lenders need to know how many current and existing loans you have. If you have numerous loans at the moment, you are considered a risky loan applicant. You need to prove that you can pay for all of these loans. Otherwise, you might have a hard time finding a lender who would approve your application.
Do you have a good payment history? Your lender will also look into your track record when it comes to paying your dues. They need to know if you pay on time and you can handle all your debts well. Should they find any missed or late payments, be prepared with a reasonable explanation that would not make them doubt your payment capacity.
How much do you utilize your credit? How you use your credit can also be a factor that could affect their approval of your loan application. Ideally, clients only use up to 30 percent of their credit. When you utilize your credit about that range, they would see you as a risky applicant. In their eyes, someone who constantly charges all their expenses has the chance to go over their credit limit. That can risk them having difficulty paying their debts later.
The factors mentioned above simply give the lenders an idea of how much you spend and how well you manage those financial responsibilities. While they contribute to the overall decision of the lender, they would try to see the whole picture and not just one factor alone. Therefore, if you have a bad credit score or are considered a risk when it comes to credit utilization rate, you still have a chance to get approved if you pay your dues on time and do not miss any payment deadlines.
If you are looking for a mortgage lender to help you finance your home, allow us to assist you. Total Lending Concepts can offer you a wide range of loan options to meet your needs. Whether it is your first home or you plan to make home improvements, our experienced team will find the best loan program to fit your situation.