Are you ready to buy a home? You need to know what your bank is looking for when you apply for a home loan.
Are you ready to finally purchase a home, or in the planning stages of doing so? Regardless of your home-buying situation, it helps to know what banks looks for when evaluating your loan application. Banks have to be sure that you will repay the home loan under the conditions of the mortgage agreement. Upon making this assessment, they have to know many things regarding the status of your past, present, and possibly future financial situation.
- Credit Score
This is a rating of your financial situation that ranges from 300 to 850 and helps banks get a handle on your past credit history. A low credit score tells banks there is high risk associated with you, while a lower number effuses the contrary.
- Current Loans
Do you have any ongoing debts like car payments or student loans? Lenders will assess whether adding a mortgage payment will impact your ability to pay back that home loan. If you have a history of making timely payments, these loans may actually help your loan because it will tell the bankers that you are responsible with your money.
- Your Down Payment Amount
Homebuyers that are ready to put down a 20 percent down payment on a home have a good chance of getting approved. Banks want you to have significant equity right from the start, and 20 percent is that number that tells bankers you are serious about buying a home.
How much money you make is not a huge part of a banker’s decision, rather the amount of money you have on a monthly basis with respect to total monthly housing costs.
Do you know how to look picture-perfect when you apply for your home loan with a bank? Contact a dedicated home loan specialist like me, Andraya Coulter. I serve the Bay Area and the entire state of California and Texas with quality, suitable, home loans!