Will I Qualify for a Mortgage?

If you’re seriously considering purchasing a home in the Maryland, Washington D.C. or Virginia areas, then odds are pretty good that you’ll need to take out a mortgage. However, you need to make sure that you qualify for a mortgage before going around looking for a new home to buy. It’s one of the reasons that we recommend that you apply for a mortgage pre-approval first – this way you don’t waste your time looking at houses that you can’t afford. Knowing beforehand whether you will or won’t qualify for a mortgage can be an advantage as it can give you some time to work on your financial standing to ensure that you don’t get rejected. The following are some of the things that a lender will typically look at in order to determine whether you qualify for a mortgage:

  • Credit score – A poor credit score is indicative of poor financial responsibility. You are much more likely to qualify for a mortgage if you have a good credit score – but you are also more likely to be offered favorable terms if your credit is good as well.
  • Payment history – A lender will go through your payment history to see if you have missed any payments or have been delinquent on any payments. One or two delinquent payments may not be enough to be disqualified, but a lender will view you as a risk if you are constantly late or have missed several payments since it will be more likely that you will miss mortgage payments as well.
  • Debt-to-income ratio – Lenders will look at your gross income as well as your outstanding debt in order to determine your debt-to-income ratio. They want to make sure that you will be financially capable to take on more debt in the form of mortgage payments.
  • Age of credit history – Lenders will be hesitant if you’ve opened up any new lines of credit right before applying for a mortgage, so avoid doing so.
  • Employment – Lenders will want to make sure that you will be financially capable of paying your mortgage. Most lenders will require that you have had at least two years of stable employment. This means that if you just got a new job, it could be seen as a negative. The longer you’ve stayed with one employer, the stabler your source of income is.
  • Capital – The more money you have in the bank, the more likely you are to qualify for a mortgage. It means that you can easily withdraw money to pay for your mortgage payments if you need to. They will look at the history of your capital though, so quickly depositing a loan from your family isn’t going to fool any lenders.
  • Conditions – A lender will want to know why you are buying a home and will also look at the housing market and economy as conditions to your loan.

If you need additional information or advice about qualifying for a mortgage, be sure to contact Alex Echeandia today.

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