Mortgage Loan Approval Basics: What Your Lender Wishes You Knew


When you've decided that it's time to become a homeowner for the first time, you need to start with securing the financing for that home. Mortgage loan approvals require an extensive application and underwriting process, and for those who have never been through it before, you may be confused or unsure where to start. Here are some of the things that your mortgage broker wishes you knew before you even started pursuing financing for your loan.

Down Payments Can't Come From Loans

One of the biggest mistakes that first-time homebuyers make is borrowing money from a friend or family member just before they buy a house so that they have a down payment for the loan. Unfortunately, your mortgage lender will go through your bank statements in detail, and any money that's seen as a loan could hinder your mortgage approval. If you do get money from a friend or a family member, make sure you have clear documentation that it was a gift, not a loan.

Communication Is Essential

Too many would-be homebuyers think that the only communication they need to have with their mortgage broker is when they fill out the loan application. The truth is that you should actually be in regular, consistent communication with your mortgage broker from the time you get the initial approval through the closing. That's because your mortgage broker can help you manage financial decisions to ensure that you don't make any mistakes that could affect your approval.

For example, any major purchases between the time you get your pre-approval and the time you close on your mortgage could affect your final approval. Anything that alters your debt-to-income ratio or changes your debt liability can affect your approval. Before you make any significant financial decisions, talk with your mortgage broker.

Consistency Is Key

You're going to have to provide pay stubs or bank statements to your mortgage broker during the underwriting process, and the lender will verify your employment, earnings, and more. As a result, the home-buying period is a bad time to accept a new position at work, even if it comes with more money. Put off any changes to your employment until after closing so that you don't have to worry about it putting a roadblock in your approval process.

These are some of the things that your lender wants you to know about the mortgage loan process before you apply. Keep these things in mind for the best possible chance of approval.

For more information, contact mortgage lenders near you.


12 April 2022

Borrowing What You Need

When it comes to borrowing cash for a new house or a nice car, how much money do you really need? Although you might be tempted to mortgage yourself to the brim or borrow a little more than you should, the fact of the matter is that everyone has financial limits. My blog discusses the impact of borrowing more than you need, so that you can make smarter decisions with your money. In addition to keeping you out of trouble, this valuable information might also improve your quality of life and protect your financial future. You never know, it could make all the difference.