Determinants of Mortgage Loan Approval or Denial
Buying a home can be a great investment and source of pride, but navigating the mortgage process early on can be confusing.
Buying a home is an exciting time for you and your family. But it can also be quite stressful — especially the parts that have nothing to do with moving.
After all, you’ll have to fill out reams of forms and provide mountains of documentation just to get a loan approved.
You might be surprised to know that you can qualify for a mortgage loan even with bad credit. In fact, millions of Americans do every year!
Just think about how much easier your life would be if you could buy a home with a low-interest rate and get out of the rent trap.
You could save yourself thousands of dollars by taking the time to learn about mortgages and rates before starting the home-buying process.
Simply knowing some of the things that determine your mortgage loan approval or denial can save you a lot of time and money. So, what are those factors? Well, relax, that’s what this article is all about. So, keep reading.
1. Credit History
Good credit history is essential when applying for a mortgage — and it’s not nearly as difficult to create as you might think. As a consumer, you have the option of deciding which mortgage lender to deal with.
However, bad credit can make it difficult to get a loan and you’ll need to do your research in order to avoid any risks.
If you’re planning on applying for a mortgage loan any time soon, you should be aware that most lenders will pull your credit history.
If you have a low credit score, it could affect the interest rate you pay and how much money you qualify to borrow.
When you plan to apply for a mortgage loan, it’s likely that you’ll be subject to a more rigorous process than in years past.
This is because mortgage lenders are getting smarter about who they lend money to. And the reason for this heightened scrutiny is simple: protecting their profits.
Poor credit history is usually translated as your inability to settle your past loans. That’s why most lenders will not give you a mortgage loan if you have a poor credit history.
2. Your Location
Homebuyers in certain areas across the US are facing more difficult situations when trying to secure a mortgage.
One of the biggest decisions you’ll make as a new homeowner is your mortgage loan provider. You’ll spend thousands of hours with them.
You’ll be asked about your credit score and loan-to-value ratio, how you plan to pay off your mortgage, and how much you’re willing to spend on a house every month.
The application and approval process for a mortgage loan can be an intimidating experience. It’s not just about getting approved — you also have to find the best interest rate possible.
Where you live can mean the difference between getting a mortgage loan approved and having your application declined.
You know how location affects your insurance premiums, but did you know that it also makes a difference in where you get your mortgage?
You can read more on the various factors that affect your insurance. Those could be the same factors various mortgage companies will use before giving you a loan.