A mortgage loan is a form of a secured loan that is given against your real estate asset as its guarantee. While the presence of the asset itself serves as a guarantee, there are various parameters that a lender will consider to determine if you qualify for a mortgage loan.
While there are numerous parameters, the two primary ones include:
Your credit standing is simply a reflection of your credit history. The stronger your credit history and the better your credit score, the higher the chances of being able to secure a cost-effective mortgage loan. We have outlined some steps that will improve your chances of obtaining a mortgage loan.
Your credit itself
Check your credit report and ascertain if there are any errors within the report. If there are any reporting errors, bring it to the attention of the credit bureau immediately. If for any reason your score is not at an optimal level, try to take corrective actions immediately.
In many cases the mortgage loan terms are inversely proportional to your credit standing. I.e., the higher your credit score, the better your chances of obtain a low cost mortgage loan. Take steps to improve your credit standing by paying off balances, making timely payments, consolidating debt, correcting errors, and taking a series of other credit-enhancing measures.
Normally, the higher your income, the better your chances of obtaining a mortgage loan. A sound financial standing indicates to the lender that you will be able to repay the loan as promised and will thus reduce the perceived risk associated with your loan. Keep all your documents ready—W2s, tax statements, paystubs, asset documents, investment documents, stock certificates, bank statements, and other documents providing details about your financial ability. While you have the option of applying for a no doc mortgage loan, the cost of such a loan would be much higher as compared to a mortgage loan that is given against verifiable documentation.
Consult your mortgage broker or lender and your real estate professional and attorney to verify if the property itself is compliant with the lender's requirements and whether the market value of the property and other associated factors are as required by the lender.
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