Applying for a home mortgage loan is always an exciting time. You’ll find as you progress through the process that, aside from providing adequate documentation to make your case, the process is fairly painless and simple. However, since so many lenders and banking institutions were burned during the housing crash several years ago, loan officers are likely to take a closer look at the finer details of each mortgage applicant.
You’re already sitting in a good position by choosing to own a home; however, there may be some factors working against you that could deter a loan officer from giving you the money you need for your first home. Here are some ways to be a 5-star loan applicant.
Credit, Credit, Credit
Your credit is likely a loan officer’s #1, #2, and #3 way to gauge how qualified you are for a mortgage.
Well, it’s a bit of an over exaggeration, but credit can be a huge influencer for loan officers handing out hefty sums of cash. While your credit certainly doesn’t paint the whole picture, it tells a pretty good story about how you’ve been as a borrower and how well you’ve managed your personal finances.
Obviously, having a sterling credit score is the best thing to do, but if you’re not one of those with perfect credit, you can do some things to help your home-buying resume. Pull your credit yourself, see if there are any discrepancies, and remedy any of them that show up as blemishes before you apply for a home loan. Shore up some of the details before you have to explain them to your loan officer.
Employment History
Another big black eye to the housing crash was lackluster employment history from many loan recipients, and employment history as you can imagine is much more heavily scrutinized in today’s mortgage climate.
Again, the best thing you can do from a loan officer’s perspective is to remain eligibly and gainfully employed for several years leading up to your loan application. Of course, sometimes this simply isn’t the case. Economic conditions as well as chance opportunities can cause you to change jobs far more frequently than you’d like.
If this is the situation in your case, you’ve been a good employee, and you expect to remain employed for several years at your current position, then reach out to your employers for help. Personal letters from past and current managers can make a case for you as an employee. By anticipating the things your loan officer will look into and providing documentation, you can make yourself more qualified in their eyes.
Assets, Liabilities, & Debts
One of the major parts of the mortgage loan application is listing your current assets, liabilities, and debt obligations. Needless to say, an abundance of assets and minimal liabilities will shine a favorable light on your loan application, but there are some things you can do to better illuminate your situation.
Get rid of petty debts. If you’re the type of person that keeps that $500 or $1,000 credit card debt floating around for no apparent reason, get rid of it! Revolving debts such as credit cards will not only show up as a blemish on your credit report, your loan officer will question your fiscal prowess. Even if you’ve been saving money for a down payment on a home, most home loans only require 5% down.
If you can spare some of your extra savings to pay down paltry debts, you’ll get a green light from your loan officer and could make a big difference for getting the green light for your loan. Also, by showing that you’re serious about getting out of debt and reducing liabilities, you’ll prove to your loan officer that you’re committed to your mortgage loan.
Get Your Finances in Shape
The biggest part of applying for a mortgage loan is to have all of your ducks in a row. You don’t have to have the best credit or be debt free to apply for a loan, and you certainly don’t have to be a rockstar. But by taking a special interest to your finances and evaluating your financial fitness in the months and year(s) leading up to your loan application, you’ll sit in much better shape for getting the loan you want.
Whether this is your first home or if you’re looking to refinance, get in touch with an account specialist at Tidewater Mortgage Services. The folks at Tidewater can work with you and give you the advice you need to build a 5-star loan application. Don’t hesitate to talk to a professional!
