What Do You Need to Qualify for a Mortgage?
The dream of owning a home often feels out of reach, but it isn’t impossible to qualify for a mortgage. Every year, thousands of people want to take the first steps to own a home but hesitate because they don’t think they’ll get mortgage qualification.
It could be because they fear the process, made some credit mistakes in the past, or don’t feel they make enough money to own a home. Many don’t know the mortgage requirements, so they just assume they won’t qualify.
What Do You Need to Qualify for a Mortgage?
We’ll examine what you need to qualify for a home mortgage and put you on the path to success.
Qualify For a Mortgage: You Need Steady Income
A mortgage is a loan. The bank determines if you qualify by balancing the risk of defaulting with the likelihood of you completing the loan. The mortgage requires you to make a monthly payment for the duration of the loan.
Your income is a key factor in determining if you get a mortgage. A steady income shows that you likely have the money to make the payment. The bank wants to see pay stubs and bank statements to show you have a steady income.
If you don’t or if you have a history of job-hopping, then it makes it difficult to qualify. If you can’t sustain an income to make the monthly payment, they won’t provide the loan.
If you want to know more, then talk to a Realtor such as The Chad Schwendeman Real Estate.
A Down Payment is Key
The less risk the bank must shoulder, the more likely you’ll get the mortgage. A down payment of 10-20 percent of the total value of the home, means they can provide less money. Also, if there is a default, then when they take the house, there is less chance of them losing money.
There are some loans from the Federal Housing Authority and United States Department of Agriculture that have lower down payment requirements. They are also backed by the government in case of default.
If you’re having trouble getting a mortgage, increase your down payment. It substantially decreases the risk on the bank.
Improve Your Credit Score
One of the most important aspects of qualifying for a home mortgage is your credit score. Your credit score is based on the credit and financial decisions you’ve made throughout your life. A good credit score means you are responsible with credit by paying it off on time, not having too much debt, etc.
If you default on loans, declare bankruptcy, or have civil lawsuits against you, then it lowers your credit score and shows you aren’t reliable to make the payments.
If you have a credit score below 600, then consider waiting and looking for ways to improve your credit score.
Talk To a Lender
If you have these areas covered, then when you go to buy a home, you should qualify for a mortgage. In fact, you may want to get pre-approved for a mortgage before looking for a home. Pre-approval means you know how much the bank is willing to lend you for a home.
If you want to learn more about a home mortgage, then please explore our site.
