Home Loan Application Process And Getting Mortgage Approved

This BLOG On Home Loan Application Process Was UPDATED And PUBLISHED On July 29th, 2020

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

In this article, we will discuss and cover the Home Loan Application Process And Getting Mortgage Approved.

Ability To Repay Is Analyzed In The Home Loan Application Process

Is the possibility of repayment analyzed in the loan application process?

The ability to repay the mortgage is determined by verifying your current employment and analyzing borrower’s total income in the 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 are allowed

Homebuyers 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 a 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 a 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, a 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

How much is the down payment for the purchase of a house

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 homebuyers who put less than 20% down payment.  
  • This allows low and moderate-income families with little down payment 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 Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com with any questions.

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