Preparing to apply for a mortgage

When you have decided to apply for a mortgage loan, refinance mortgage or home loan, you will do better if you get prepared for the application process by gathering all the information necessary to demonstrate to lenders and by knowing what the lenders seeks to determine whether they are approved or not.

Loan quotes and pre-approval

When you apply for a loan with no obligation quote from a lender that you will have to provide your credit score, debt information and income level. With this information, lenders adapt some lending options that can meet their needs. This loan quotes does not create any obligation for either party. You do not have to apply for the loan or the lender has to approve immediately. If you decide to apply for the loan, there will be a broader investigation of its credit and debt situation.

Pre-approval means that you authorize the lender to pull your credit report, analyze its debt and revenue and conduct a major investigation into its financial situation, in order to verify that the information you provided is true and that you are eligible for loan approval.

If you get pre-approved, it is likely that the final approval of the loan is only a matter of time. And the rest of the process will consist only of boring paperwork. Note, however, that should only request a pre-approval process when you're sure you want to apply to the lender, because too many credit report checks affect your credit score negatively.

What lenders are looking

Lenders are sure that you have a steady income. If they are employees who want to make sure you have at least a year of stability with their current employer and that his salary is enough to meet the minimum monthly payment possible. Usually, the monthly payment can not exceed 35% of their income, because it is believed that the remainder must be available for other expenses, including expenses such as unexpected medical bills, etc.

If you are not employed, you must show proof of other income. Your tax and bank statements are usually the main sources of information in these cases. The statements have to show at least a minimum monthly income constant. This minimum will be taken into account when calculating the monthly payments you will be able to afford.

Lenders also check your credit report, in search of stains on your credit history. The past year will be especially important at this stage. There should be no delay or loss of payments of significant importance in the last two or three years. Past bankruptcies can be an obstacle unless occurred 8 years ago, while your credit report shows impeccable performance in the following years.

With respect to documentation and information you need, basically, among others: sales contract, social security number, names, addresses, proof of income (tax returns, bank statements, wages documentation) All data on bank accounts (savings, checking, etc), Other investment statements. You can always contact the lender and ask whether any additional documentation is required.