It’s always good to know what your mortgage company or lender is expecting from you when you apply for a loan. There are 4 main elements that lender’s look at regarding your finances: your employment and income history, what capital you have, equity or collateral, and your credit score.
Your employment history includes if you have an employer or your self-employed, how long you’ve been employed, the consistency of your paychecks and income, and future employment and income. They review your tax returns, pay stubs, profit and loss statements, and W2’s. During
this review, they also look at your monthly debt – the payments you make for vehicles, loans, alimony, child support, etc.
When evaluating your capital, lenders will look into your bank statements for several months or up to a year. They look for financial consistency and any large deposits and where these deposits come from. If you are considering asking for a loan for a down payment on your mortgage, you may want to consult your lender first to make sure the loan is approved.
If you’re buying a previously-owned home / resale, your lender will order an appraisal for your home to see how much equity will be in the home when you buy it. If you have a large down payment or money from a previous sale to invest, the amount of equity will be greater and possibly afford you a better interest rate with no Mortgage Insurance payments. If you’re buying a new home, depending on the features and amenities you and your builder use in the building process, you may have a lot of equity in your home because your home’s square footage automatically appraises for a certain amount in certain areas.
Everyone knows how important your credit score is when you are obtaining a loan. An excellent credit score can potentially get you a lower down payment and interest rate with your lender, allowing you to get pre-qualified for and borrow more money.
Consider these helpful tips if you are going to apply for a mortgage for a home for sale in the Greater New Orleans area.
