Home Loan Application Process And Getting Mortgage Approved

This BLOG On Home Loan Application Process Was UPDATED On June 28, 2017

When a lender makes a decision about a mortgage application, they consider two basic factors:

  1. Ability to pay the mortgage loan
  2. Willingness to repay the home loan

Ability To Repay Is Analyzed In The Home Loan Application Process

Ability to repay the mortgage is determined by verifying your current employment and analyzing borrowers total income in home mortgage application.

  • Lenders prefer mortgage applicants to have been employed at the same place for at least two years, or at least be in the same line of work for a few years.
  • Gaps in employment is allowed.
  • Home buyers proposed monthly payment will be compared to borrowers monthly income and debt.

Willingness To Repay Mortgage Loan

Willingness to repay is influenced by how mortgage applicants have paid previous loans.

  • Lenders will be examining how the property will be used.
  • Owner occupant, second home, investment home.
  • Willingness can be gauged by credit report and previous commitments to pay rent and/or utility bills.
  • There is also a greater tendency to stick with payments for owner occupant borrowers.
  • In the event of financial crisis, borrowers have a tendency to pay for an owner occupant mortgage than rental property or vacation home mortgage.

It is important to remember that there are no set rules and each applicant is handled on a case-by-case basis. Many applicants come up a little short in one area, but make up for it with other strong points. These compensating factors may include a large down payment, solid employment, reserves, second job with at least one year longevity but income not used as qualifying income, extensive educational background or overall financial health.

Down Payment on Home Purchase

For applicants who need to make a lower down payment, mortgage insurance is protection for the lender in case they stop making payments and default on their mortgage loan.

  • Conventional Loan requires mandatory private mortgage insurance on home buyers who put less than 20% down payment.  
  • This allows low and moderate income families with little down payment to to become homeowners with low down payment programs on conventional loans.
  • All government loans, with the exception of VA Loans, require mandatory mortgage insurance.

Online mortgage application at www.gustancho.com .  Once you submit your mortgage application, the home loan application process has started. Please contact us at 1-800-900-8569 or email us at gcho@gustancho.com with any questions.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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