How Do I Qualify For A Home Loan?

Qualifying For A Home Loan

So, you’re looking to purchase a home and you’re wondering if your current financial standing will enable you to do so. Qualifying for a home loan that will allow you to get the home of your dreams so here are the things that you should understand. These are the factors lenders typically look at to check if you can qualify for a loan.

Determine the loan type and down payment you will need

Let’s say you’ve found the house of your dreams. Now, you have to review the different types of loans and determine which will work best for you. Additionally, you’ll also need to find out how much the down payment will be.

Check your credit report

Your credit score will be one of the main identifiers that lenders use to find out whether you’ll be able to pay off a mortgage. The higher your credit score, the better chance you will qualify a larger loan or a better rate. Make sure to review your credit score and double-check your current balances and statement of accounts. Sometimes credit reports can have errors as well; get it early so you’ll have time to get it corrected.

Employment

Lenders will also check your employment history. For lenders, an applicant with a stable work history is considered less of a risk. Consequently, if the applicant does not have a stable work history, the could potentially affect their ability to pay off the loan.

Income and Expenses

Your lender will look at your income and where it’s coming from. Furthermore, they will also determine your fixed expenses and debt. The disparity between these two variables allows lenders to determine whether or not you qualify for the loan. Ideally, your monthly payment should not exceed 28% of your monthly income.

We would be happy to discuss the loan process and answer your questions. Give us a call at (310) 796.9088.