If you applied for a loan several years ago then you probably received a very different experience then you would today. Applicants often were approved for loan amounts higher than they were even interested in, and loans higher than they could really afford. In the past few years mortgage lender have tightened up significantly and have become extremely picky about who they will lend to and how much they will lend. This is simply because there has become more concern about borrowers not being able to pay back the loan. As an applicant this becomes more of a problem when you are trying to achieve the best possible loan. However, luckily for you (the applicant) there is a lot you can do!
•1. Credit Score: The first thing you need to make sure of is that your credit score is good. In order to achieve the best possible interest rates your credit score needs to be pretty good. I suggest that if you are thinking about applying for a mortgage then check your credit score a couple months ahead of time to make sure there aren't any mistakes being reported. If there are mistakes it can take a while to fix. Also make sure you aren't taking on more credit during the time of the application. When going through the application you want to make sure to make payments on time, try to keep you balance below 30%, and don't go out and make any big purchases.
•2. Savings Account: Mortgage Companies want to see that you as the applicant will have enough money in your savings for the down payments, upfront fees, and a couple of months worth of mortgage payments just in case something happens where you might not receive a paycheck. Basically the lender needs to know that incase of an emergency you will still be able to pay back your loans.
•3. Loan Amount: When applying for a mortgage there are certain guidelines that lenders follow. Mortgage Payments can't be more than 29% of a borrowers income and that overall debt payments including credit card debt, school loans, etc, can't be more than 41%. With that being said it is very important to apply for an appropriate loan amount. Mortgage Officers will be happy to go over these figures in detail with you to find an appropriate amount.
•4. Availability and Requests: During the process there is going to be a lot of paperwork needed. If you want this process to go smoothly and efficiently than you need to make yourself available and be willing to present the requested documents quickly, we strongly recommend that you start gathering documents ahead of time. This includes bank statements, W-2s, and paystubs. There are other forms needed for certain situations, which the mortgage officer would request.
Company NMLS 1540459