Doing What it Takes to Get a Mortgage Loan by Crystal Guthrie

When it comes to getting a mortgage loan, it is important to understand that lenders consider more than just your income when determining whether or not they will give you the loan you are requesting. While there have always been other factors used when making this determination, the factors that are taken into consideration have grown even more stringent due to the current state of economy. Therefore, it is best for you to have a greater understanding of what lenders are looking for before you apply for a mortgage loan. This way, you will have the best chance of getting the mortgage loan you are after when it comes time to apply.

A Change in the Way of Thinking

Until very recently, lenders were not overly concerned about who they loaned their money to. After all, they reasoned, they would always be able to get their money back if the borrower defaults on the loan because the value of the loan is backed by the value of the property. As many lenders have now learned, however, there is no guarantee that the value of property will only go up. Therefore, when borrowers where unable to repay their loans and the value of the property had actually decreased, the lenders experienced a significant loss of money. Unwilling to get stung again, lenders are taking a far more stringent approach toward determining who they will loan their money to.

Things Taken into Consideration by Mortgage Lenders

In theory, mortgage lenders should be able to obtain all of the information they need from you by simply looking at your credit history. By looking up your credit report, the lender can determine:

* Whether or not you have a good credit score * Your job history * The amount of revolving debt you have

Still, there are other things that your lender will want to know in order to determine how much of a risk it will be to lend money to you. For example, you will need to demonstrate that you have enough money to make a down payment on the home you are purchasing. Or, if you are getting a home equity loan, you will need to demonstrate that you have built up enough equity in your home to cover the loan you are trying to get.

Your employer may also require you to provide documentation of a solid work history and income. Although some of this information may be contained in your credit report, the lender may also want to see W-2s, check stubs or other forms of documentation.

Of course, the appraisal will also play a large role in determining whether or not you receive the loan you are after. If the purchase price is less than the appraised value, you will have a far better chance of getting the loan you are after.

Making Yourself a Good Candidate for a Mortgage Loan

In addition to agreeing to a reasonable purchase price, there are a few things you can do to help improve your chance of getting approved for a mortgage loan. These include:

* Obtain a copy of your credit report and correct any mistakes that may be on it * Pay off or reduce any large outstanding balances that you may be carrying * Don't apply for any new credit cards or close old credit card accounts until after you obtain your loan

It is also in your best interest to do some comparison shopping. Just because one mortgage lender is less than thrilled by what you are bringing to the table, it doesn't mean the same will hold true for all lenders. So, if one doesn't seem interested in lending to you, find one that will!