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A Checklist When You're Looking for a Mortgage

By Al Twitty | April 11, 2020

Whether you're heading to your local bank for a mortgage or you're going to be signing up for one online, you need some basic information that's pertinent to the home you're buying.

You can think of a mortgage as a type of loan that's given to you in order to buy property. As with any other type of loan, the lender needs to know that you're eligible to receive funds and that you're not a liability to their business. The way that they do this is by taking a look at different information that you're able to provide to them, like your income, bank account statements and credit history. By having all of this information handy, it'll streamline the mortgage process so that it's quicker and easier for you.

Pay Stubs and Income Information

Your lender wants to know what your income is like simply because it's important that you're able to afford your future mortgage payments. For example, if you're trying to take out a mortgage on a $500,000 home and only bring in about $400 a week in income, you'll likely fault on many, if not all, of your monthly payments. This is another reason why it's important that you look for property that is specific to what you can afford.

Home Inspection Results

Some lenders want to know the condition of the house prior to allowing buyers to take out a mortgage. If a house needs a lot of repairs or is in generally poor condition, you could be denied. However, some homebuyers recommend skipping the inspection because it isn't always necessary when purchasing property. You'll need to talk to the lender to find out if they require these results or if they aren't needed.

Credit History

Your credit history is an important piece of information that can alert a lender to your spending habits. If you have poor credit, this could be due to the fact that you've defaulted on many past payments or have already lost a home to foreclosure. In order to be approved for a mortgage at a good rate, you'll need either a good or excellent score. This shows the bank or lender that you're a responsible person who is able to handle their finances.

Employment History

You might be wondering why your bank needs to know your past jobs in order to see if you qualify for a mortgage. The reason for this is because it shows them consistency. Sure, your income might be fine right now, but is the job that's bringing in this money relatively new? Have you been bouncing from job to job in the past without any real stability? This can be a red flag to a bank that's trying to give out a mortgage to a customer.

Bank Statements

Just because you have a good credit score, great job and a steady income doesn't always mean that you have enough in your bank on a consistent basis that will pay bills and mortgage payments. Many people overspend, so even though their incomes are fine, they still live paycheck-to-paycheck without any real stability in their lives. Your bank will want to know what's currently in your bank and what you spend your money on regularly to see if you'll be able to afford future loan expenses.

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