Home Loan Qualification
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by: marciafreeman
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Obtaining qualification from the lender is the first step necessary when applying for a home loan. Some potential applicants may feel uncomfortable about this step because they dont fully understand what qualification for a home loan means. Qualification is the process lenders use to decide whether, and how much, to lend to an applicant. By understanding the process, you will be in a better position to qualify for the amount you need for your home loan.
EMPLOYMENT AND INCOME
The lender uses several measures to determine your ability to repay the home loan you are requesting. A consistent, dependable source of income is important. A minimum of two years with the same employer is commonly desired. If your current employment has been less than two years, a lender will look for other signs of stability, such as years with a previous employer or in the same field. Have you recently changed jobs? Can you demonstrate your reasons were responsible and that the employment is stable? The lender will verify your information with your employer. The lender will look for evidence that you are responsible and have resources to repay the loan.
The lender will require a full disclosure of your income and financial responsibilities. By comparing what you earn against what you owe, the lender will be able to evaluate your ability to meet your home loan payments.
ARE YOU A GOOD RISK?
Your credit report will be reviewed to evaluate the risk that you will make your mortgage payments regularly. Most importantly, lenders look for a history of consistent payments made on time. They will also be looking for evidence that you use credit wisely, staying comfortably below maximum levels.
STEPS YOU CAN TAKE BEFORE YOU APPLY
The decision to buy a home is one that takes some time. If possible, avoid making changes to your employment situation prior to seeking qualification for a home loan. Know what is in your credit reports from the three major credit bureaus. Be sure to correct any erroneous information as soon as possible. Reduce your level of debt as much as you can before attempting to qualify for a home loan. The more of these steps you take, the greater will be your chances of qualifying for all the money required for your home loan.
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