Now that you understand how lenders qualify you for a loan, it’s time to proceed to the mortgage application. Filling out a mortgage application is the first step to getting approved for a loan. Typically, when you apply for a loan a lender will look at your employment history, salary, credit indicators and any other indicator of how likely you are to pay your loan.

Lenders are particularly interested in your activity in the past two months, and they like to see stability in the form of a steady income, on-time payments and few career changes. While they’ll look at credit card payments from the past six months, they will pay extra attention to any rent or mortgage payments that were over 30 days past due, as most people would rather be late on car payments, credit cards or even student loans before missing a payment on their apartment or home.

Having a stable income is very important to lenders and they look at your last two years of income and job movement. If you have a tendency to have multiple gaps in employment, your lender may worry that you can’t hold a job, and therefore will not be able to pay them back. If you don’t have a typical salaried or hourly full-time job, your lender will want to see the last two years of income you’ve earned through overtime, freelance and self-employment.

Credit will be another big factor in your mortgage qualification. Since the recession, many people have lost their homes to foreclosure or have been forced to short sale their homes and the credit market has tightened up. A lender will give their best interest rates to borrowers with the highest credit scores and those that put down a sizable down payment—at least 10-20%. A high credit score would be anywhere from 760 to 850.

Some of the documents you lender will want to see are: the money in your account for your down payment and expected closing costs, the signed sales contract between you and the seller, social security numbers and bank statements, and W-2 forms. Most lenders will want to see proof of all forms of income you’re using, including child support, alimony and stocks. Your lender should give you a checklist of every document they will need. For more information about the home buying process or Denver Real Estate for Sale, visit our blog at PorchLight Realty.

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