5 criteria to get your Home Loan Mortgage approved
Why do some people get their home loan mortgages approved in a breeze while others struggle through with hiccups? What are the differentiating factors between one application and another? What do lenders look at when they evaluate you?
In reality, getting your home mortgage approved depends on how your background matches the list of criteria set forth by the lender. Although these rules that they have are not always entirely hard and fast, the loan application officer does not stray too far away the guidelines he or she has been entrusted with. Needless to say, applicants should at best present themselves as creditworthy creditors and have the adequate documented records as proof of this.
Believe or not, lenders have a scoring system for aspects of your background that they are evaluating. The following are areas in which you will be scrutinized on:
1. Employment History
You must have been in employment for not less than 2 consecutive years within the same industry. This shows that you have the capability to be sustained in a permanent position, and do not hop from one job to another. Lenders look for stability and consistency as best they can, and your employment history is a good basis for them to evaluate your capability to generate income to finance your mortgage.
2. Credit History
The next indicator of your credit-worthiness is your short-term debt, a.k.a. your credit card bills. It's ok to have some debt on your credit card, but you must show a history of on-time payments. Apart from that, too much debt on credit cards with credit lines fully utilized shows the possible inability to pay for debt. Therefore, at least six months before applying for a loan, it would be best to clean up your short term debt as much as possible.
3. Outstanding Liabilities
The size of your income dictates the amount of liability you can support. As a rule of thumb, lenders stipulate that a person's total monthly payments for liabilities should not exceed 42% of his or her monthly earnings. With this, total liabilities include credit card debt, car loans, student loans, existing mortgages or child support collectively. This means that in order to qualify for your home loan mortgage, you need to reduce your monthly repayments on liabilities to the point which is acceptable by the lender.
4. Cash and Asset Reserves
Another aspect to show that you can afford your home loan mortgage is to provide proof to the lender on the amount of cash and liquid assets that you possess. The minimum reserves that you have must be sufficient to pay at least 2 months of monthly repayments for mortgage payments. Some lenders even go to the extent of requiring 6 months worth of reserves in order to qualify.
5. Existing Housing Repayments
Finally, if you already have existing housing rental payments, there should not be any late repayments for these within the past 12 months. This again shows your priorities as a responsible tenant and is adequate proof to the lender that you potentially will be a responsible borrower as well.
Some applicants who may lack supporting documents for their home loan mortgage applications should compensate by providing documents that will help to prove themselves to be responsible pay masters. These could be payments receipts of utility bills, phone bills or even car insurance, which are useful documents to be used to prove that you are indeed creditworthy.
About the author: Chris Edison is a successful author and regular contributor to http://www.mortgage-traps.com a home mortgage loan information site, that reveals mortgage traps for home buyers. Copyright © 2004 - 2008 Universal Wealth Creation |
| This article can be copied and reproduced only if left intact with the authors details below. |
Return to the previous index page: Wealth Creation and Financial Wealth >>
Return to the Main Investment Articles index page: Renting Shares >>
These stockmarket & business articles have been supplied in the interest of Universal Wealth Creation visitors who want to expand their knowledge in the wealth creation & investment fields such as the courses offered by Jamie McIntyre.
Other sites we recommend here at Universal Wealth Creation are: 21st Century Academy with Jamie McIntyre, Universal Trading Solutions which promotes great wealth creators like: Kim Reilly, Simon Martin, Justin Beeton, Louise Bedford, John Kaye, Daniel Kertcher & more. They run great wealth seminars across the country.
Additional speakers that appear at 21st Century Academy seminars are options & CFD gurus Nik Halik and Daniel Kertcher, motivational speakers Justin Herald and Tony Christiansen, Property investors Jason McGuiness, Rick Otton, Mark Rolton and Warren Borsje, Tax structure sprecialist Leigh Barker, Internet marketers Jenny Armato and Tom Hua, Trading Diary masters Bill Stacy and Andrew Dimitri from Planet Wealth, Kinetic Securities stockbroker Angus Knight and JB Global broker Justin Beeton, & Traders International and Eminis Global specialist Peter Elsworth.
To mention a great option book I highly recommend: Options by Renting Shares. Another great trading author is Louise Bedford who is particulary good at candlestick charting.
Meanwhile, there is a great opportunity to learn about the stock market through reading these kind of articles. Learn about share trading, options, futures, CFD's, derivatives, warrants, indices & more in the stock market. You will also learn plenty about business & finance through authors opinions in the marketplace. Enjoy your journey towards financial freedom.
