Four Factors Mortgage Lenders Consider

HomeBlogFour Factors Mortgage Lenders Consider

Buying a home is an incredibly exciting prospect, even if the process can be complicated. A house is not a small purchase, and few people are able to buy it in cash. So, if you’re among the high percentage of Americans who need financial help when purchasing a home, you’re going to need a mortgage.

Four Factors Mortgage Lenders Consider

The reality is that you’re borrowing a lot of money—potentially a few hundred thousand dollars—so mortgage lenders need to know that you can pay it back before they decide to approve your loan. While making the decision, they may consider many factors.

Here are just four you should be aware of:

  1. Credit Score- When you’re applying for a mortgage, one of the most important things lenders consider is your credit score. The higher it is, the higher the likelihood that mortgage lenders will trust you to pay your debts.
  2. Income- Mortgage lenders want the assurance that you can pay them back, so they need proof that that you have a reliable source of income and employment.
  3. Debt- Mortgage lenders consider your debt-to-income ratio, meaning they want to know how much debt you already have and how much of your gross monthly income will go toward it. If your DTI ratio is too high, they may decide that you would have too much debt with a mortgage and it would be too risky for them.
  4. Down Payment- Mortgage lenders care about your down payment because it affects their risk. If your down payment is large, that’s good news for lenders because your mortgage will be smaller and their risk decreases.