Have you found your dream home in Duluth, Minnesota? If so, this will most likely be the biggest purchase of your life. While a fortunate few can make the full payment in cash, most of us would need to take out a mortgage from a lender. But the question is: what if you do not qualify for a mortgage?
There are a number of reasons why a mortgage application might be denied. Perhaps you have a small debt that you need to pay off in order to improve your credit score and bring it up to the lender’s qualifying standards? Perhaps you did not disclose a vital piece of information on the application? To take the guesswork out of the equation, here are four fundamentals of what a mortgage lender in Duluth, Minnesota, looks for when reviewing a mortgage application…
1. Your Total Income
Draw up a list of all of your monthly earnings. If you are married, you should include your spouse’s monthly income on the mortgage application as well. The more monthly earnings you can prove on your mortgage application, the more debt you will be able to handle in the eyes of your mortgage lender in Duluth, Minnesota.
2. Total Debt You Are Currently Carrying
Make sure you disclose your accurate debt balance on your mortgage application — this should include any auto loan, student loan, minimum credit card payments, or any other monthly debt obligations. The more forthcoming you are in your application, the better. Your mortgage lender in Duluth, Minnesota will then add up all your recurring monthly debts and compare that to your gross (pre-tax) monthly income to calculate your debt-to-income ratio.
3. The Amount of Money You Need
The amount of money you want to borrow on your new mortgage will result in a new monthly payment. Will you be able to afford the extra debt in the eyes of the mortgage lender now that you have added one more monthly payment to your existing debt obligations? Mortgage lenders in Duluth, Minnesota usually have guiding principles on how much debt-to-income ratio they are willing to accept for a mortgage.
4. Your Credit Score
If you have a great credit score, it should not be difficult to qualify for a mortgage, as almost any mortgage lender will gladly underwrite your application. However, if your credit score is in the mid-600s or lower, that could be a cause of concern. A low credit score may suggest to the lender that you are not punctual with your loan payments, and there is a risk of the loan going into default and the lender not getting its money back plus interest. No wonder getting approved for a home loan with less than stellar credit can be a hard nut to crack, but it is not impossible. The first step is requesting a free credit report and carefully reviewing it before applying for a home loan. If you find errors in your credit report, dispute them immediately.
Hopefully, this will give you a good idea of what mortgage lenders are looking for before you contact them.
Are You Looking for a Trusted Mortgage Lender in Duluth, Minnesota?
If you are looking for a reputable and licensed mortgage company in Duluth, Minnesota, look no further than the team at Compass Mortgage. We are here to help you get your dream home! Call us at (833) 638-7836 or contact us online to learn more about how we can help you make wise and informed choices regarding your mortgage financing.