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Mortgage Application and Qualification

If you are considering purchasing a home, one of the first things you will want to know is if you can actually get a loan and what the process is for qualifying for a mortgage.  There have been quite a few changes in the lending community over the past five years, and these changes have been felt by borrowers who want to get a mortgage loan or mortgage refinance.  There are new government watchdog agencies that are watching over the banking industry.  Changes have been made in the loan approval process and borrowers find that they need to provide more information to the lender and must be more responsible for its accuracy.  Even so, there are three main items that will determine whether or not you can qualify for a mortgage. 


First, you must prove that you have the capacity to make the payments.  This is why you must provide documentation that verifies your income and your employment.  Usually, you are required to show a few months worth of paycheck stubs as well as W-2 forms and often even income tax returns to prove your income.  At least 2 months of current bank statements as well as lists of assets will also be required.  The lender will verify your employment at the beginning of the process and often will do so again just prior to closing. 


Next, you have to show a willingness to make the payments.  This is determined by your credit report, which not only shows how much debt you have but also gives the lender a look at your credit history.  They can see if you have lots of late payments and high balances.  If you have low balances and no late payments, the lender will be more likely to qualify you for the loan.  However, even if you have a poor credit report, some lenders will offer a bad credit mortgage if other factors fall within the requirements for that. 


The final aspect of qualifying for a mortgage is the appraisal of the property.  The home is being used as collateral for the loan and must appraise at a market value that meets or exceeds the value of the loan.  It must exceed the amount of the loan if it is a mortgage refinance.   


If all your ducks are lined up in a row and you meet the necessary criteria,  the loan will be approved and you will simply need to bring in the required amount of money to pay the closing costs when you sign all of the paperwork at the title company.