Mortgages: Strategies for Getting Approved

Before a buyer even begins to look at homes, it is critical to know if they qualify for a mortgage, and how much of a loan they qualify for. There are several proactive steps that can be taken in order to prepare for getting approved for a mortgage. If followed, these tips will successfully guide you to realizing the dream of homeownership.

Even though you will need to meet your loan officer in person, there are steps to take to prepare yourself ahead of time. You may need to fill out an online application, or you may be asked to begin an application over the phone. Documentation will need to be submitted to the loan officer either in person, by email, fax, or mail. The loan officer will request documentation and items such as tax returns for the past several years, pay stubs, bank statements, retirement or investment fund information. The loan officer will also review all your debts versus income to determine what is called your “debt to income” ratio (DTI).

In addition to calculating your DTI, the loan officer will review your credit history to ensure there are no defaults on previous loans, late payments, etc. Occassionally there are items which appear on the credit report that are mistakes or items that have indeed been paid off but are still being reflected. When this occurs, you will need to contact the creditor to make the correction. These problems will need to be addressed and cleared up before the lender will approve your mortgage.

With the above information, the loan officer will then be able to let you know whether or not you will most likely be approved for a loan. Final approval is issued after your loan application has been submitted to an underwriter. Depending on the outcome, you will then be able to either move forward with an immediate approval, or become aware of outstanding items that need to be corrected. It’s not unusual for a few sticking points to appear when applying for a mortgage. Some of these items may include:

• Tracking down required documentation, such as tax returns, pay stubs, legal decrees
• Creating a history of paying all bills on time
• Finalizing a divorce or any other lawsuit
• Waiting for a bankruptcy or foreclosure time frame

Although lenders are in the business to lend money, they want to make sure the borrower is going to pay back the money loaned; therefore they do require you meet their lending guidelines.

The best tips to prepare for getting approved for a mortgage are relatively simple: pay your bills on time, have a good employment history, maintain proper documentation, and make any repairs necessary on your credit report. A good loan officer will assist in guiding you through these steps so that when it comes time to move forward and begin searching for that perfect dream home, your financial picture will be in excellent condition, ready to be approved for a mortgage.