Found your dream house? Congratulations! But now you have to prepare to get your mortgage loan approved. It could one of the hardest thing you could be doing this year. There’s a lot of paperwork involved. All your financial history will come under scrutiny. Your credit report will be the first thing your mortgage lenders will be checking.
When you are going to apply for the loan, you will have to submit each and every detail of your income, assets and liquid funds available to you. They will also ask for the source of your down payment which needs to be acceptable under their terms. All of this means handing the lender your account statements. The lender is going to go through them thoroughly looking for red flags in your credit report. To make certain that they find you clear, you need to go through the account records yourself first. You need to find the black spots before they do so that there is a chance to fix them. To speed up the mortgage process and to get your loan approved easily, you should try for a pre-approved mortgage.
Learn more about pre-approved mortgage here: https://www.crediful.com/pre-approved-mortgage/.
But before you start applying for a mortgage, you need to make sure your application will get approved. This means coming out as ideal for your prospective mortgage lenders. When it comes to approving the mortgage, your lenders will be looking at your financial history. This includes:
The mortgage lender is going to look for the funds available to the applicant and make sure that they belong to him only. A mortgage underwriter is well trained in uncovering funds which are objectionable or payable debts which are hidden. They could easily analyze your financial management through your bank statements. To get that loan you need to clear some things that may be questionable to them.
Non-Sufficient Funds Charges
FHA loans ask of the lenders to manually approve the borrowers with NSFs even if the computer has already approved the person. Too many overdrafts or NSFs prove the borrower to be poor at financial management lowering their chances of getting that loan. NSFs on your bank accounts put you under additional scrutiny.
Outsize or Irregular Deposits
Outsize deposits are defined as a single deposit that exceeds 50% of your monthly income. Recent large deposits on your bank statements somehow lead to the notion that the down payment was borrowed. The borrowed fund is acceptable only if you disclose it although you will have to pay a little additional amount to the monthly payments.
This is a weak spot as it also suggests that the deposit is an illegal gift. The person cannot take support from a party (real estate agents or home seller) that are to gain from the transaction. I’ll suggest that you wait for a period of 60 days after such large deposits before you apply for that loan, you want so badly. It will make this fund seasoned which means that then those funds are yours and the source of that deposit will not matter anymore.
Accounts Correspondence with Payments
You need to be certain that the accounts mentioned in the applications are not paying any of your other private or business loans. This may give a curious head start to the lender and may prove to be fatal for this loan application in the future. All the accounts mentioned in the application must have regular payments. A $200 monthly payment from nowhere may be enough to warn the lender of your irregular activities.
High Utilization Rate
The one thing that mortgage lenders hate is when they see a large balance on your available credit. This gives them the impression that you are poor at managing your finances. You need to keep your utilization rate below 30% and try making payments regularly. They are going to judge you with this, whether you are able to pay your financial obligations or not. If you do not have a good credit score, it’s going to be difficult for you to get the loan. And even if you do get the loan on a bad credit score, you will have to pay a high-interest rate.
Delinquency is the unpaid debt on your credit report. It can be your unpaid credit bills or an unpaid loan. This on your credit report indicates that you may not be able to pay the mortgage. Mortgage lenders don’t like this on the credit report and your chances of getting the loan become less likely. To improve this, you need to be regular with your payments. Most creditors do not report this to the credit bureaus if you are one month behind the schedule. But make it two and they will surely send an alert. Pay your dues on time and it’s that simple. Credit payment history takes up 35% of your credit score so you need to be careful with that.