Qualifying for a Mortgage
Do you want to find out if you qualify for a mortgage loan?
Qualifying for a mortgage can vary greatly from bank to bank and it’s actually a pretty complex process. Not every lender necessarily offers the same product, so some may approve you, while others may say, “no way.” There’s also a little thing called “risk appetite,” and not every bank is as hungry as the next, this is why shopping around is paramount to secure the best deal, because one bank may agree to do business with you, but not at the best terms, so it’s important to find the right lender for you.
Tip: A mortgage broker can shop your loan application with multiple banks and lenders all at once to find you the lowest rate with the fewest fees.
If you’re interested in purchasing a home with the help of a mortgage, your starting point would be getting pre-qualified. Essentially, a “pre-qualification” allows you to determine how much you can afford based on income, asset, and credit score estimates. So you basically tell a bank or mortgage broker that you do “X” job, make “X” amount each month, have “X” credit score, and can put “X” down. At this point, they should go a step further and run some hard numbers, such as figuring out your debt-to-income ratio, to see what mortgage amount you can qualify for. Assuming everything looks good, they may get you a more robust pre-approval, which is a commitment from a bank to lend you the money you need to make the purchase in question.
Where do you start?
Well, you’ll need to figure out if your credit score is up to snuff and whether you have adequate income to make the proposed mortgage payment each month. Generally speaking, a credit score below 620 is considered subprime in the mortgage world and will make qualifying for a mortgage that much more difficult. If you’ve got previous foreclosures on your credit report, things will get even more problematic, but if your credit score is above 680 and you’ve got some decent credit history to back it up, that shouldn’t be a hurdle. As far as job history goes, it’s important to show the mortgage underwriter you’ve had a steady job, typically two years or longer. This essentially proves that you will continue to receive regular income to make those costly mortgage payments each month. If you just graduated and have held a job for a mere two months, don’t expect to qualify for a mortgage unless your position directly correlates with what you studied in school. For example, if you went to medical school, and now have a job as a doctor, this might be sufficient to qualify for a mortgage, but if you were an art history student who has been working as a flight attendant for two months, mortgage lenders probably won’t feel comfortable lending to you.
When seeking out your mortgage, you’ll also need to consider the mortgage down payment requirements, which vary depending on the type of loan you’re after. Obviously, the amount of money needed will also vary based on the purchase price of the home. If you want a more expensive house, expect to put more down in order to qualify. And if we’re talking about a refinance, you’ll need a certain amount of home equity to qualify for the mortgage, as determined by loan-to-value ratio constraints.
Here’s a general list of what you need to qualify for a mortgage. Keep in mind that qualification requirements vary greatly by lender and loan type.
- Credit History – minimum of 3 active trade-lines with 2-year history on each (credit score minimums vary)
- Job History – at least 2 years on same job or in same line of work (recent graduates in certain fields may be exempt)
- Income – verifiable income for the past 2 years that meets debt-to-income ratio limits
- Assets – enough to cover down payment, closing costs, and at least 2 months of mortgage payments
When it comes down it, it’s all pretty much common sense. Do you think you can qualify for a mortgage? Do you have a track record of making on time payments, carrying large amounts of debt and paying it down, holding a job, and saving money? Are you ready to make the commitment? Would you lend you a mortgage?
So be sure to do plenty of calculations and speak with a local mortgage broker/loan officer to see where you stand, because without actually running the numbers, you won’t know for certain, and they’ll be able to get you a quick answer so no one’s time is wasted!
At Global Unity Mortgage, we will work hard to make your home-buying experience stress-free! Most recently being awarded the 5-Star Professionals Award for excellence and appearing in Connecticut Magazine, we are often recommended by our clients who have previously benefited from our personalized service and attention to detail! Call us today at 860-872-9479 or email us at firstname.lastname@example.org for reliable mortgage assistance and fast pre-approvals!
Our rates even beat the Quick and Guaranteed lenders!
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Serving and Pre-Qualifying in Connecticut towns such as Manchester CT, Vernon CT, Hartford, West Hartford, Glastonbury, Simsbury, Avon, Canton, East Haddam, Essex, Wethersfield, Westport and all other towns in CT!