A Mortgage loan can be quite confusing for anyone looking at trying to buy a house. With all the information about getting a mortgage loan out there this article will try to make it easier to understand. Unfortunately, you cannot already qualify for a loan until they approve a different factor. It is known as your debt to income ratio.
Usually for any kind of loan, edges look at you debt to income ratio to see if you qualify for a mortgage loan. When approving a mortgage customers have to have a debt to income ratio of 28/36 at most. What the first number method is that 28 percent of your gross income per month can go towards housing. For the second number, being the 36, method that only 36 percent of your gross monthly income can go towards your total monthly debt. Your total monthly debt consists of any kind of long term loan like a student loan, car loan and credit cards. Generally speaking most mortgage loan lenders use the lesser of the two numbers. If your debt to income ratio is higher than 28/36 they may require a different kind of loan or more of a down payment.
After looking at your debt to income ratio the next important thing they do for getting a mortgage loan is a background check on your credit report. A good credit report is vital to get a mortgage loan. Lenders that give out a mortgage loan typically want to see some sort of stability. With your credit report they will look at the last two years the closest. If you have any payments that were not paid on time they will especially keep that in mind.
While looking at stability of your particular situation lenders want to see your last two years of employment. That method if you’ve been at the same place for more than two years you are in a pretty good situation for getting a mortgage loan. However, if you have not been they look to see if you have been at the minimum in the same field of work. Finally if you have any other income that you have earned over the last two years like part time work, bonuses, or self employment they will take that into account in addition.
Typically you need to bring several documents when you go to get a mortgage loans. The most important papers are your W2 forms and a recent paycheck stub to show you nevertheless are working. The lenders also want to have proof of any kind of money you have in stocks, bonds and any other accounts you have. If you prepare yourself by meeting the requirements before you go it will help you get a mortgage loan more successfully.