Qualifying For A Mortgage Loan

Answer 1

Much confusion and questions surround mortgage loans in today's economy. Many banks are no longer supplying mortgage loans as they have in the past and qualifying for government backed programs is harder than ever. So the question arises, how does one qualify for a mortgage loan?

First, to qualify for any mortgage loan you must be gainfully employed or have some other reliable source of income that is sufficient to support a mortgage payment as well as general living expenses. Further, the amount you will qualify for will be dependent upon your household's annual income. Another item that is looked at for a mortgage loan is your credit score. Today credit scores that are below the 600 range are not even considered for a mortgage loan.

The financial institution will also look at other expenses that you have. For example, do you have a car payment? How many children are you supporting? In addition there is a base number that is used as a standard deduction from your income that is considered living expenses. This number may or may not be realistic for you, however it is the number that will be used.

How long you have worked at your job is another consideration. Many financial institutions will not loan money to purchase a home to someone who has only been employed for a few weeks or months unless the purpose of the mortgage is to relocate due to the employment change and there is guaranteed employment in the future. The price of the home obviously is also a consideration as well as the amount of down payment the person has available. A person having a 20% down payment to apply to the purchase is more likely to get a loan, all other things equal, than a person who has a 10% down payment. The reason is simple. The higher the down payment, the less the bank needs to loan and therefore the less risk involved in the financing.

Purchasing a home, once one has qualified for a mortgage, can take as long as 60 days. There are things that must be done prior to the final approval including a survey of the property and a title search to ensure no one else has a claim on the property.