At Harbor Mortgage Company, we know that buying a home is an exciting step, but often a daunting one, too. One of the most daunting parts about it is getting a mortgage loan, as you may be turned down before you find a lender willing to let you borrow the money you need. To help you feel more confident and in control of the process, our team has put together this article on some of the main things that mortgage lenders look for when assessing potential borrowers.
- Hard Inquiries. One thing that mortgage lenders look at when assessing your application is what are known as hard inquiries, or applications for other forms of credit or debt. If you’ve recently applied for multiple credit cards, for example, that will make you seem like a bigger risk to lenders.
- Payment History. Mortgage lenders will also look at your payment history on other loans, credit cards, and lines of credit. This information helps them see whether you will be a responsible borrower or not—if you have a track record of consistent, on-time payments, you’ll look better to a lender, while if you have late or missing payments, you may need to explain yourself.
- Credit Utilization. A third thing that mortgage lenders look at in terms of your credit history is how much of your available credit you are using at a given time. Most lenders prefer borrowers to keep their credit utilization at or below 30%, meaning that if you have $10,000 of available credit, you should try not let your balance exceed $3,000.