After learning how to build your credit history as you apply for a mortgage loan, the next step is going to banks or lenders and starting your application. Preparing all the documents you need, you also have to learn how to canvass for banks with mortgage rates that suit your current financial status and capabilities.
The next experience that you will learn from after repairing or balancing out your credit score is knowing how mortgage brokers or lenders would approach you. Many first-time loan applicants were not really okay with their first experience in dealing with lenders, but in the long run–gets along with it and learns how to communicate and transact with them.
Just like what consumers do, they judge services and products offered to them by companies before purchasing or accepting the service. Same goes with lenders, they review your financial background, your income, credit history, etc. They judge you mostly on the following:
- This is where your credit score and history will play an important role. Lenders would want to know what kind of individual you are in terms of paying your credits. Are you always on time or late in paying? Do you pay in advance, etc? Your credit score will also help the lender determine the mortgage product that you deserve. The most popular credit score used by mortgage lenders is the FICO score, by Fair Isaac Corporation.
- Your current debt and income ratio
- The next thing that lenders would want to determine is your ability to pay once you are granted the mortgage loan. Do you have enough monthly income to pay your debt? Do you have full time, regular job or part-time only, etc? This will also allow the lender to know how you are going to be able to pay them back on the loan.
There’s actually more than these two that lenders review when someone applies for a mortgage loan to them. But these are two are among the most important, yet a critical judgment that will contribute to your approval for a loan or not.