Talking to a lender, bank or credit union about mortgage options should be every homebuyer’s first step. The experience should be educational, enlightening and an essential time saver; not dreaded.
But time and time again we see homebuyers put off talking to a lender, assuming they won’t be able to qualify for a loan with today tougher standards. Stop assuming and get to a lender.
Two things could happen: 1) you could be surprised by the lending options available to you OR 2) if you cannot qualify, the lender can help you map out exactly what you need to do to be in the best position to qualify later. Both sound like a win-win to us.
So what are the 5 must haves for mortgage approval? According to an article done by MercuryNews.com they are:
- Down Payment- Don’t rule yourself out just because you don’t have a lot saved. “The myth that people need 20 percent is exactly that, a myth,” said Frank Codel, head of Wells Fargo’s national consumer lending.
- Job History- The down payment is important, but banks are also concerned about whether borrowers will be able to keep up with mortgage payments.
- Debt Load- Lenders want to know that you’re earning enough to handle all of your bills, not just your mortgage payments.
- Credit Score- Borrowers generally need a credit score of at least 640 to qualify for a conventional mortgage in today’s market, according to the National Association of Mortgage Brokers. The exact FICO score cutoff will vary depending on the lender. But those who have lower scores may still be eligible for an FHA loan.
- Paper Work- One of the biggest differences in the application process today is that lenders want documentation to verify your financial status.
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