Will You Qualify? What You
Need To Get A Mortgage
If you are a first time
homebuyer, navigating all the new information about homeownership, the home
buying process, and mortgages can seem overwhelming. If you are beginning the mortgage shopping
process, but have no clue as to what information you'll need and whether or not
you'll even qualify, here is some information that may make the process a
little smoother.
Will I Qualify For A
Mortgage?
There are essentially
three things that lenders look at to determine whether or not you qualify for a
mortgage.
Income Verification
When purchasing a
property, all income of a homebuyer must be validated by a mortgage underwriter
in order to receive a loan. Income
verification can be done using several types of documents such as a W-2
statement, paycheck stubs, or income tax statements that show proof of income.
These documents usually will have to span a period of two years or more to show
you have a history of a steady income.
Income proof can include such things as child support payments,
disability payments, or income from the Social Security Administration. These additional monthly payments can
increase your potential to qualify for a mortgage, as well as the amount you
will qualify for, but like regular income, must be validated in order to count.
Debt-To-Income Ratio
Another important factor
in getting a mortgage will be your debt-to-income ratio. This involves looking at your total debt load
and monthly payments, including car payments, credit card debt, and any student
loan debt. If the ratio of debt exceeds
40 % of your income, you will likely have to pay off some debt before you will
qualify for a loan. In this case you may
want to seek out the advice of a financial advisor to help with this process.
Credit History
The final consideration
that lenders will take into account in determining whether you qualify for a
mortgage is your credit history and score.
They will not only be looking for a strong history of on-time payments
for all your debts, but also that you have already established credit. You can arm yourself with this information by
getting your free credit report from sources such as Equifax, so that you are
able to check that it is accurate and up to date.
When getting a mortgage, being prepared with a little background
research and all required documents will make the process simpler and less
stressful. Armed with this information,
you will be able to get the best possible
