Are you in process for making the biggest investment of your life? Are you ready for the purchase of your home? Whether you have just initiated the workout for considering the option or you’re still on thinking about it – it helps determining the details a bank looks for when evaluating your loan application.

 The lender has to be sure for your likelihood to repay the loan as per the terms of mortgage agreement. And apart from knowing bank requirements, it’s also important for you to be in touch with a real estate agent. Spring Hill reality helps you understand your goals and the picture that fits better in the frame of your budget. The experts there make the assessment based on various factors related to your financial situation.

 For now, the list below is a description of some factors that bank or virtually any lender will look at before approving home loan:

  1. Your Credit Score – Credit score in terms of bank language is also known as your FICO score. This number (between 300 and 850) is an indication of your past credit history, while the higher the number, the better results. A low score tells the bank about risks associated with lending you the loan. Your credit score is calculated with the help of factors as: payment history, credit utilization, and length of credit history (the longer the history the higher the score). Other factors as new credit accounts also impact the score but to a very a lesser degree.
  2. Income – Banks are not concerned with how much you make, rather your monthly income with respect to a monthly housing cost. A higher income is not necessarily important for loan qualification process, but the income does influence the loan amount. Lenders will consider your total monthly income from various sources to ensure your income is sufficient for covering monthly mortgage payments.
  3. Present loans – Do you have ongoing debts or long term payments as student loans and car payments? Banks will go through all such payments as well. Having such loans is not bad, especially if the history shows proper payments, but banks want to know how the expense is eating away your income.
  4. Down Payment Percentage – If homebuyers put down 20 percent, they will stand a better chance of receiving a loan. If you aim for 20%, this will ensure that you’re a serious and capable buyer. Consider how worse were financial crisis in 2008 and then, if banks had to extend home loans then it would have been riskier for them. While it certainly doesn’t mean that if you cannot put down 20% then you’re not up for an approval, it just indicates that banks are more risk averse. And in case where you cannot be ready for 20% down payment, you will still have government insured programs that allow you to pay less up-front.

Getting the Loan Approval

Whether your purchase is to take place now or some years later, approaching a bank precisely means being prepared. So keep yourself prepared and in good books with attractive credit history, plenty income, and down payments as all this will count in at the time of loan approval. Banks certainly want to minimize their risk and prefer new borrowers who can show a better history with controlled finances. So, keep your history clean and controlled – and this is not just for the banks but for yourself as well.

NOTE: A greater rule of thumb is to make the purchase of your home when you’ve managed and well maintained your credit history and when no insurance, monthly mortgage payment, and property taxes have added up to your monthly income.

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Rather Make a Phone Call?
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and we will be happy to meet your needs.

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5337 Main Street, Spring Hill TN 37174