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What do lenders need to know?

It’s a good idea to learn as much as you can about getting a mortgage before you start shopping for a home.


That means working with a local mortgage broker, like Capitol Mortgage Group to get the best possible loan.

So start you may wonder what are mortgage lenders Looking For?

Lenders look at a few different factors when you apply for a loan with the goal of assessing your ability to pay back the loan. The key areas taken into consideration are your income and job history, credit score, debt-to-income ratio, assets and the type of property you’re looking to purchase.


1st Income And Job History

One of the first things that mortgage lenders consider when you apply for a loan is your income. Your mortgage lender does need to know that you have a steady cash flow to pay back your loan.

Your lender will want to look at your employment history, your monthly household income and any other forms of money you have coming in, like child support or alimony payments.

We will ask for documents such as your W/2’s, paystubs and possibly your tax returns.


2nd Credit Score

Your credit score plays a MAJOR role in your ability to get a mortgage. A high credit score tells lenders that you have a history of handling your finances well, whereas a low credit score shows you have a history of mismanaging your money.

The minimum credit score for a conventional loan is usually 620. For a government-backed loan, you’ll need a credit score of at least 580, but that can vary depending on which loan you choose.


A higher credit score can give you access to more lender options and lower interest rates. If you have a lower score, it’s a good idea to try to boost your credit score or address any issues on your credit report. A local mortgage broker, like Capitol Mortgage Group can provide some guidance on improving your credit score.


3rd Debt-To-Income Ratio (DTI)

Your DTI is calculated by taking the total of all your minimum monthly debt payments and dividing it by your gross monthly income.


Depending on the mortgage type you’re applying for, the DTI a lender is looking for will vary. Typically, for a conventional mortgage, a DTI of 45% or less is the benchmark – but many government-backed loans will have higher thresholds.

The DTI will tell your lender how much you can afford.


4th Assets

Lenders want to know that you have reserves in the bank when you apply for a loan. This assures the lender that you’ll still be able to make your payments if you run into financial trouble. Your lender will ask to take a look at your assets, which include any type of account that you can draw cash from. This will include checking/savings accounts, retirement accounts, and investment accounts.


We hope this answers some of your questions , we are available to answer any further questions at 804-362-7600 OR


What Documents Do I Need To Get A Mortgage?

Get all your paperwork in order so you can speed up the process before you apply for a loan. Let’s go over the documentation you’ll usually need when you apply for a mortgage.


Proof Of Income

Your lender will ask you to provide multiple pieces of paperwork to verify your income. Some documents you might need to provide include:


At least 2 years of federal tax forms

Your two most recent W-2s and pay stubs

1099 forms, or profit and loss statements if you’re self-employed

Divorce decrees, child support decisions and any other legal documentation that confirms that you’ll continue to receive payments for at least another 3 years

Legal documentation that proves you’ve been receiving alimony, child support or other types of income for at least 6 months, if applicable

Credit Documentation

Your lender will ask you for verbal or written permission to view your credit report. They’ll look at your credit history and search for negative factors (like a bankruptcy or foreclosure) that would make it difficult for you to get a loan.


If you had an extenuating circumstance that damaged your credit, it’s a good idea to explain this to your lender and provide documented proof. For example, if you missed a few payments on your credit card bills due to a medical emergency, you may want to give your lender a copy of your medical bills. This proves to your lender that the bad marks on your report were the result of a one-time instance, rather than a pattern.


Proof Of Assets And Liabilities

Your lender might ask you for some or all of the following when they verify your assets:


Up to 60 days’ worth of account statements that confirm the assets in your checking and savings accounts

The most recent statement from your retirement or investment account

Documents for the sale of any assets you got rid of before you applied, such as a copy of the title transfer if you sold a car

Proof and verification of any gift funds deposited into your account within the last 2 months

Your lender may also ask you for supplemental information on any debts you owe, like a student loan or an auto loan. Cooperation with your lender only makes the process easier, so be sure to provide any requested information as soon as possible.


How To Get A Mortgage With Rocket Mortgage®

Once you have all of your documentation in order, it’s time to start searching for a loan. Here’s what you can expect when you apply for a home loan with Rocket Mortgage®.


Step 1: Apply For Mortgage Preapproval

Preapproval is the process of learning how much a lender is willing to lend to you. When you apply for a preapproval, lenders take a look at your income, assets and credit, and tell you how much they can lend you. They’ll also determine your interest rate.


Although similar in name, a preapproval shouldn’t be confused with a prequalification. Prequalifications are less accurate than preapprovals because they don’t require asset verification. While a prequalification can be helpful, it won’t give you the most concrete idea of how much money you’ll be lent, whereas a preapproval can.


Getting preapproved for a loan and knowing the amount of money you will receive will help you narrow your property search, and make you more appealing to both sellers and real estate agents.


Check Your Credit Score

The first thing you’ll do when you apply for preapproval is answer a series of questions about yourself, your income, your assets and the home you want to buy. You can then give Rocket Mortgage permission to look at your credit report.


Your credit report is a record of your borrowing history from any lenders and creditors you’ve worked with in the past, including credit card companies, banks, credit unions and more.


Customize Your Personal Mortgage Solutions

After we verify your credit, Rocket Mortgage will give you a few mortgage options that you can customize to fit your needs. We’ll show you a few different mortgage solutions and how much you can qualify for. You can also learn more about your individual interest rates, loan types you may be eligible for, monthly payments and down payment requirements.


Step 2: Get Your Approval Letter

Once you find the best mortgage solution for your needs, you can see if you’re approved online. If you are, we’ll send you a Prequalified Approval Letter that you can use to begin house hunting. If you want an even stronger approval, you may want to consider contacting a Home Loan Expert and applying for a Verified Approval.


Step 3: Find A Property And Make An Offer

Now comes the best part – finding the home that’s right for you. To help you with your search, try connecting with a real estate agent in your area when you start viewing properties, especially if you’re buying your first home. A real estate agent can help you narrow your search and show you properties that fit both your budget and needs.


Once you find the right home, your real estate agent will also help you submit an offer, and potentially begin negotiating with the seller. Once the seller accepts your offer, it’s time to move to the final stages of the home buying process.


Step 4: Verifying The Details

During the verification process, an underwriter takes a closer look at your assets and finances. You’ll provide documentation and paperwork that backs up the information you submitted when you applied.


Your lender will also need to verify your property details. This usually involves ordering an appraisal, verifying the home’s title and scheduling any other state-required inspections. As soon as underwriting finishes, you’ll receive a document called a Closing Disclosure.


Your Closing Disclosure tells you everything you need to know about your loan, including your monthly payment, down payment, interest rate and closing costs. Make sure your Closing Disclosure is similar to your Loan Estimate, which you should have received from your lender 3 days after you applied for your loan.


Step 5: Closing

Once you get your loan approved, it’s time to attend a closing meeting. At closing, you’ll have a chance to ask any last-minute questions you may have about your loan. Remember to bring your Closing Disclosure, a valid photo ID, your down payment and a check for your closing costs. Once you sign on your loan, you’re officially a homeowner.


The Bottom Line: Keys To Getting A Home Loan

Lenders look at many factors when you apply for a mortgage. They’ll examine your income, job history, credit score, debt-to-income ratio, assets and the type of property you want to buy. You’ll be responsible for providing them with all relevant documentation that can prove your viability to qualify for a loan.


The first step in getting a mortgage is applying for preapproval. Getting preapproved gives you a good idea of the loan principal you can receive, making it easier to shop for homes within your budget. Once you’re preapproved, you can start viewing homes, and potentially enlist the help of a real estate agent.


Your agent can help you make an offer on the right home once you find it. You’ll need to get full approval from your lender once the seller accepts your offer. Full approvals also include underwriting and an appraisal. Once you’re approved, you’ll attend a closing meeting, sign the closing documents, and pay your down payment and closing costs.

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