What Home Mortgage Lenders Look For

Home Mortgage Lenders are well versed in what to look for when they sit down with clients who are interested in buying a home. The higher you rate in each one of the specialty areas that the mortgage lender discusses with you, the better will be your chances of qualifying for a mortgage.

Mortgage lenders look at a person’s job stability, their income, the money they have in reserves, their credit history and their down payment. Let us think like mortgage lenders and see if you have what it takes to make your home a reality.

Job Stability- Mortgage lenders like to see individuals who are stable and secure in their jobs. If you have been at the same full time job for two years or more than this will work to your advantage.

Income- To prove your income, mortgage lenders must see two years worth of your W-2 forms. They also need to see a few of your most current pay stubs that clearly show how much money you have earned to date. If your job is commission based then you still must provide a document that shows the income you have earned in two years time. From this the mortgage lender will figure out the average. Those who have monthly debts that are 41 percent or less of what they gross on a monthly basis will be looked at favorably by mortgage lenders.

Down Payment- How much money do you plan to use as a down payment? Traditionally mortgage lenders look for 20 percent down. This will make it possible for you to get the best interest rate that you can. If you are only able to put down five or 10 percent this is something that most mortgage lenders will still be willing to work with.

Reserves- Reserves are money that is left over in your bank account after everything involving the purchase of a home has been paid, including the closing costs. Mortgage lenders like to see that an individual has at least one month of reserves. Those reserves would be equal to a mortgage payment, property insurance and all of the taxes on your home. How much you should have in reserves is contingent upon the kind of mortgage you are looking to get. As a general rule of financial thumb, mortgage lenders recommend that potential homebuyers have reserves of two to six months.

Credit History- Your credit history and present credit score play an integral role in whether or not mortgage lenders will consider you to be a safe risk or not. Whether you like it or not your credit history will be thoroughly scrutinized by the mortgage lenders and will have an impact on whether you are accepted for a mortgage, or not.