Three Overlooked Factors in the Mortgage Loan Approval Process
When the average person thinks about securing a mortgage from a mortgage company, the main thing on their brain is their credit score. While credit is definitely a large part of the consideration process, don't ever think that it is everything. There are a number of additional factors that are typically factored into the process that could actually cost you an approval if you're overlooking them.
Sketchy Job History
Mortgage lenders' main focus is on whether or not you can repay the loan per their terms. Your job history typically offers a strong indication of whether or not you will be able to meet this goal. If you're thinking of purchasing a home in the near future, and you are also thinking about switching jobs, it's best to hold off on this life change.
Some lenders look at the entire age of your work history; however, there are some lenders that focus on how long you stay with each employer. When the latter job-history review practice is utilized, frequently changing jobs could actually work against you. Always make sure you have a solid work history.
High Debt Load
It doesn't matter if you have an excellent credit history if you have high amounts of debt; this can also work against you when you are applying for a mortgage. Again, even if you're currently paying all your bills on time, when you have a high debt load, some lenders consider you a risk.
The thought is that since your debt load is so high, in the event of an unexpected situation, such as a reduction of your income, you would easily fall behind on payments and therefore default on your loan. Lower your bills and establish a debt-to-income ratio that is no more than 43% for the best results.
Missing Paperwork
In order to protect themselves, lenders can't simply take your word as true. You are almost always required to back up any financial statements you make with evidence. If you are missing any necessary information, this could also cost you an approval.
For example, if you state that you have a retirement account with $45,000 in it, you will be required to provide a financial statement verifying this information. Even if your application isn't outright denied, this failure can at the very least slow down the approval process, possibly causing you to miss out on your dream home.
The more prepared you are, the greater the chances of an approval and the sooner you can have a house to call your own.
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