3 ways that you can help your mortgage application

3 WAYS THAT YOU CANHELP YOUR MORTGAGE

APPLICATION

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Your mortgage application is an overall view of yourfinancial life. It incorporates many different factors.

Typically there is not one single factor that willeliminate your eligibility for a loan; it is typically a

combination of factors.



If one aspect of your application is negative, havingcompensating factors in other areas can help to redeem youreligibility for the mortgage. The top three things that lenders

look at when evaluating an application include:

Credit History

Employment History Liquid Assets.



Have a Good Credit HistoryMost lenders want to see a lengthy and positive credit

history. They are not concerned with only the last monthor two; they want to see your financial history over a

period of time – typically 12 months. This is in the case ofaverage to good credit histories. If you have a blemishedhistory, they might go back further to see what else youhave had going on that led up to your credit blemishes,especially a bankruptcy or foreclosure. They need to be

able to determine if you have overcome the obstacles andhave moved forward with good credit.



In addition, if you have a large amount of outstandingbalances on your credit cards or other loan balances, it is bestto pay them down as best as you can before applying for amortgage. This is not to say that having a balance on yourcredit cards is bad, but having many credit cards, each ofwhich are close to their maximum limit, could have a negativeimpact on your credit score. The more debt that you haveoutstanding, the lower your credit score and the morenegative the view that your lender has of your overallfinancial picture.



A Stable Employment History is Important

Employment history can sometimes be used as acompensating factor on a mortgage application that isnot very strong. If you had a sketchy past in terms ofyour finances, but have made up for it in the last year,

the lender might look for other compensating factors toback up your application. If you have a stable

employment history, meaning that you have been withthe same employer for more than 2 years, it can work

as a benefit towards your loan application.



What lenders do not want to see is large gaps in youremployment history or many changes in employment inrecent years, this shows that you have unstable income

and are unlikely to pay your financial obligations on time.A stable job, on the other hand, shows that you are morelikely to pay your loans back on time, especially when it is

coupled with a good credit history.



Liquid Assets are Necessary on theMortgage Application

Purchasing a home requires liquid assets because you needto have the means to make the down payment as well aspay the closing costs in cash. Refinancing your mortgagerequires liquid assets simply to show that you have the

ability to pay in the event that something happens to yourcurrent income, although in some cases, you will need to pay

closing costs in cash, which requires available funds.



Liquid assets can be money in a checking or savings account aswell as stocks, bonds, some IRA accounts and vested insurancepolicies. Each lender will have their own requirements regardingwhat they consider a liquid asset. The higher your liquid assetsare, the more likely it is that your application will be approved.Just like a strong employment history, liquid assets can be

used as a compensating factor when determining youreligibility for a loan.

checking account



Obtaining a mortage is a little tougher than it was inprevious years, but it is not impossible. The harder that youwork to clean up your financial life and make the mortgageapplication look enticing, the more likely it is that you willget approved for a loan. It is important to always becognizant of your credit history and to keep a stable job, butit is even more important to focus on these factors whenapplying for a laon. If you look at a picture of your financiallife right now and it does not look very good, it might bebest to hold off on that home purchase or refinance untilyou can get things in order and have strong factors topresent to the lender that you would like to give you amortgage loan.



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Justin McHood is Americas MortgageCommentator and has been providing

Mortgage commentary for over 10 years.

INFORMATION PROVIDED BY: JUSTIN MCHOOD

MORTGAGE COMMENTATOR

Information Originally Published:January 10, 2015 BLOWNMORTGAGE.COM LENDER HOTLINE: 888-581-5008

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3 ways that you can help your mortgage application

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