There are many people who want to buy a house, but don't know if they will be approved for the loan. There are usually some hoops that you have to jump through to ensure that you will approved for the loan. Here are some things that you need to know about getting a home loan.
1. Stable Income
One of the first things you will need to be able to prove to the mortgage lender is that your income is stable. First, are you an employee that gets paid a paid check each month? If so, it will be a little easier to get the loan, since they see you as having a stable job. It is people who are commission based, or who are self-employed that might have a harder time getting a home loan. They consider these people more of a risk, since their income is more sporadic. This means when the business is doing well, they are getting paid a lot, and when business is slow, they are getting paid little. In these situations you can still get a home loan, but you will probably need to have 2 years worth of taxes to prove your income. They will take the amount that you earn annually and divide it by 24 months to get an idea of how much you make each month to determine if you can get a home loan and how much you will be approved for.
2. Debt
Another important thing that the mortgage lender will look at when getting you a home loan is your debt. You might make a lot of money, but if you have a lot of debt and payments that you are responsible for each month, like car loans, student loans, credit cards, and other things you are responsible for, you won't get as much of a loan, if any loan. What the lenders will do is put your income against how much debt you have. Then they will calculate how much you could afford in home payments (based on an equation they have for discretionary income, and how much you need to live). If they determine that you have too much debt and not enough income to handle the loan, they won't approve you for the mortgage. This is why it is best to try and pay off as much of your debt as you can, downgrade to less expensive cars and so forth before you apply for a home loan.
These are a couple things you will need to get a home loan. Contact a company, like Blue Wave Funding, for more help.
