Home Mortgage - 4 Key Qualification Requirements

By: Ben Horne

When you apply for a mortgage, your loan officer, broker or underwriter is going to take you through the application process and then ask you to provide proof or documentation supporting your answers. To learn more about how that application process works and exactly what it takes to qualify for a mortgage, keep reading.

Income

The first concern a loan application will ask about is your income. They'll want to know your gross income. To verify your income, you'll need to provide either your current pay stubs or a letter from your employer and a copy of your bank statements verifying it. In addition, you will need your tax returns from the past year.

If you're self-employed, bring tax returns going back at least two years along with your profit and loss statements and proof that your business and income is steady and reliable.

Employment History

If you just started a new job, you're unlikely to obtain a mortgage. Mortgage lenders want to lend to people who are in stable and steady employment with a reliable source of income.

If you're having trouble qualifying for a home mortgage, wait a year until you've built up some employment history with the same employer.

Proof of Assets

A mortgage loan application will also ask about your assets, including savings balances, investments, cars and other properties you own.

For any assets that you list on your application, you will need to provide verification, including a list of all your bank account numbers and the corresponding branch addresses, copies of the title or ownership papers for any cars or vehicles that are owned in full and a list of all your mutual funds, stocks, and investments along with any corresponding paperwork.

Credit History

Order a copy of your credit report and make sure every entry is correct. If you find any errors or discrepancies, write in and ask to have those entries removed from your credit rating.

A mortgage lender will look up your credit history independently, but they'll also ask you up front about your debts. Be honest when asked about all your consumer debts, including furniture store balances, student loans, credit card balances and other debts.

Bring a list of all your creditors and their contact information along with any credit card statements for the last six months. If you're paying child support or alimony, provide proof indicating the amount of your monthly obligation.

While not a very glamorous or quick-fix solution, simply taking the time and patience to actually work on your credit score is one of the best things you can do for the long run.

Taking two years or even just a year to focus on paying all your bills on time each month, decreasing your debt load, getting your credit card debt down to 30 percent or less of your available credit and simply focusing on the health of your finances will improve your credit score exponentially.

Get ready for a mortgage loan application process by organizing your financial papers and statements. Start a folder and keep copies of at least six months' worth of statements on file alongside a copy of your latest tax return statements.

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