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What Will A Lender Look At When I Apply For A Mortgage?

By Eric Goodwill

What will a lender look at when I apply for a mortgage?  Read here to find out what a lender analyzes and improve your chances of approval!

While the mortgage application and approval process may seem quite confusing to most mortgage applicants, it is actually relatively simple.  A lender typically reviews a mortgage application and concentrates on just a few simple aspects of the application.

Your Credit History

The first aspect that a lender will look at when you apply for a mortgage is your credit history.  Your credit history and score are the best evidence a lender has to prove that you historically pay all of your debts on time.  Most mortgage lenders want a borrower to have a credit score of at least 700.

Your Down Payment

The next aspect that a lender will look at when you apply for a mortgage is your down payment.  Most lenders require at least a 10% down payment in order for the mortgage application to be approved.  This is because in the event of default, the lender wants to be assured that if they need to foreclose and sell your home; they will be able to recoup their entire investment.  The larger the down payment, the less risk they have that they will lose a portion of their investment.

Your Ability to Repay the Loan

The last aspect that a lender will look at when you apply for a mortgage is your ability to repay the loan.  The lender will first need to verify your income by reviewing historical pay stubs and bank statements.  Once your income is verified, they will review what your total housing costs will be including mortgage, taxes, and insurance.  If your monthly payment exceeds 33% of your gross monthly income, your loan will be considered risky and you will either be denied or offered a loan with a higher interest rate.

Related posts:

1. What Does A Mortgage Lender Consider When Making A Loan Decision?
2. Can I Get a Better Mortgage Interest Rate If I Apply By Myself?
3. How Is The Mortgage Lender Determined For A Home Mortgage?
4. When Is The Best Time To Apply For A Fixed Rate Mortgage?
5. Should My Wife & I Apply Separately To Get The Best Mortgage Rate?