Getting Approved for a Mortgage


A mortgage is basically approved when you provide your land or house as collateral for the loan. However, in most cases, the lender is not interested in ending up with your property. The lender wants you to be able to make the monthly payments. This is why lenders will usually carry out a financial background check on you prior to approving a mortgage. From the background check, the lender will determine your borrowing risk. To determine whether or not to approve you for a loan, the lender will consider the following:

How Much Down Payment Are You Offering?
Generally, a down payment of 20 percent of the value of the home is required by most lenders. However, lenders offer a variety of mortgages. This being the case, there are some mortgages that do not have the 20 percent down payment requirement. However, your financial background will be scrutinized more if you choose to offer a lower down payment.

Lenders take the down payment you provide acts as your commitment to paying the mortgage. If you put a smaller down payment, you can easily walk away from the payments without incurring a huge loss. This means your risk in the mortgage transaction will be lower than that of the lender.

If you cannot raise the 20 percent for the mortgage, the lender will require some sort of insurance. The reason for this is to protect themselves from potential losses in case you default payments. There are also a number of mortgages that do not require borrowers to provide PMI. An example of these loans are those offered to military family members. Make use of the 72t calculator to make things a bit easier.

Amount of Debt You Currently Have
Your approval for a mortgage will also depend on your current recurring expenses. In the financial world, this is known as the debt-to-income ratio. The lender will want to know all the current debts that you pay on a monthly basis. Some of the expenses the lender will want to know about include child support, student loans, alimony and credit cards. Housing, food and other monthly expenses will also be considered. Generally, all your gross income should be more than 70 percent when the expenses have been removed.

You may find it difficult to pay back the mortgage if your recurring monthly expenses are more than 30 percent of the gross income. Utilize an fha mortgage calculator to your advantage.

Your Credit Score
Your credit score will also be checked so that the lender can know how much mortgage to offer. From your credits score, the lender will determine whether you are a low risk or high risk borrower.

Check out the benefits of using a financial calculator at


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