One of the first steps in buying a house is getting a pre-approval status for a loan from a mortgage lender. Going through this process can make some people nervous, as not everyone will qualify for a loan, but it is a necessary step if you need to borrow money to buy a house. When you go through this step, you will discover two main things. The first is whether you qualify for a mortgage loan, and the second is the type of loan program you qualify for. Here are the main factors a lender will use to determine these things.
Your Current Credit
The number used to represent your credit worthiness is called your credit score, and this score plays a huge role in whether you qualify for a loan and the type of loan you qualify for. Credit scores range from 300 all the way to 850, and most people fall into the range between 500 to 800; however, there are people that have higher or lower scores than this. If you have a credit score that is 800 or higher, you can pretty much qualify for any loan type you want, which means you will have more options to choose from. If your credit score is less than 600, you might have trouble finding a loan program that works for you. If your score ranges somewhere between 600 to 800, you should be able to qualify for a loan, but you may have to use a certain type.
The Down Payment
The second factor lenders look at is the amount of cash you have on hand for the payment you place when buying the house. When you have a lot of cash for this purpose, you will qualify easier for a loan and have more options. When you have little cash for this purpose, you might have to use an FHA loan or VA loan, as these types of loan programs do not generally require large down payments.
Your Finances
Finally, a lender will look at things like your current job, income, and debts. They will carefully analyze these things to see how much money you could afford to borrow with your current income and debts, and this too will help determine what loan programs you qualify for.
If you would like to find out if you qualify for a home loan and which type of loan program you should use, gather up your financial documents and contact a lender.
Share11 July 2019
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