Whether you are a first time buyer or a seasoned pro, there are two things to consider when you are applying for a conventional (traditional) mortgage loan. Lenders base their decisions on two basic factors: 1) your financial ability to pay back a loan, and B) your willingness to pay back a loan.
Ability to repay a conventional mortgage is determined by verifying your current employment and analyzing your total income. Lenders prefer for you to have been employed at the same place for at least two years, or at least be in the same line of work for a few years. Your proposed monthly payment will be compared to your monthly income and debt. Willingness to repay is influenced by how you have paid previous loans and by examining how the property will be used. Willingness can be gauged by your credit report and previous commitments to pay rent and/or utility bills. There is also a greater tendency to stick with your payments if you live in a house as opposed to a rental property or vacation home.
It is important to remember that there are no set rules and each applicant is handled on a case-by-case basis. Many applicants come up a little short in one area, but make up for it with other strong points. These compensating factors may include a large down payment, solid employment, extensive educational background or overall financial health. For applicants who need to make a lower down payment, mortgage insurance is protection for the lender in case you stop making payments. This allows low and moderate income families to become homeowners with low down payment programs.
We know that buying a home is the biggest financial commitment most people ever make, and with these types of complicated transactions can come a lot questions and concerns. Let the licensed, professional mortgage lenders at InterTrust ease your concerns and answer your questions. Let’s Make a Plan.