Home Loan Approval Tips

If you’ve never applied for a mortgage before, you wouldn’t know what to expect. There are many things a prospective lender looks at and judges before approving or rejecting your loan application. Here are a few of the things banks will be reviewing before approving your loan:

• Income – Obviously, the number one item banks will review is your income. More specifically, they will measure your income-to-debt ratio to ensure you will be able to pay back the loan.

• Credit History – Life sometimes affects income and the ability to pay bills. The banks are focusing on bankruptcies and legal judgments more than smaller delinquent debts.

• Employment – Current employment is great, but banks want to see a history of steady employment. Typically, they look for at least one year in a full-time position, but may want to see a longer history for higher loan amounts.

• Savings – Most banks want the purchaser to have a percentage of the mortgage in savings. This shows the lender that you are disciplined enough to put money aside. They may ask to see bank transaction statements showing routine deposits.

While most banks review these criteria, these criteria alone are not the deciding factor for approval of a mortgage loan. It should also be noted that each bank has their own approval criteria, and one bank may approve where another would reject.