What Every Borrower Needs to Apply for a Mortgage

Applying for a mortgage can be a scary process, but once you get everything in order, the process gets a bit simpler. Here is some basic information that every borrower should be aware of when it comes time to start applying for a mortgage:

When applying for a mortgage on an owner occupied property, it is mandatory that the borrower is a full-time resident of that property. Banks and financial institutions are currently enforcing this mandate. Enforcement officers are now knocking on doors within certain time periods to confirm the borrower is actually living within the property. Should the borrower not be living there, there are heavy penalties to be accessed to the violator.

The most important qualifications that lenders take into consideration are the borrowers ability to repay, willingness to repay, evidence of assets, the likelihood of default, and the likelihood of recovering from financial stress. Incomes that will be considered are the W2 Form, borrower’s salary, any bonus or overtime, commissions, retirement income, self employment income, and the ratio of debt. Debt to income ratio will also be a factor.

Should the buyer be receiving a financial gift to aid in the purchase of a property, it should be acknowledged that there should be no established repayment of that gift. All available funds should be seasoned funds, meaning they need to be documented as being in the borrowers account for 2 months. Gift funds can be used by the borrower, but the borrower usually still needs 5% of his own funds.

Some other major points include:

  • The borrower must have qualified income.
  • Show Two years tax returns
  • Provide Two months pay stubs
  • Two years employment in the same job or profession
  • Student loans should be included.
  • Spousal income must be verified
  • Child support payments will be considered
  • Self employed borrowers must have a 2 year history
  • The property must be owner occupied

In addition, there are a few points that shouldn’t happen such as:

  • Should not have a 30 day or more late payment within the last 12 months
  • Should not have late rent payments
  • Should not have a collection account
  • Should not have a foreclosure within the last 7 years
  • Should not have a recent bankruptcy
  • Should not have any tax liens

These are conditions that every borrower should take into consideration and address prior to applying for a mortgage. The agents at All Vegas Valley Realty are familiar with the mortgage process and can be of great assistance to you and help you make all the right decisions. Contact them today.