Things Mortgage Lenders Consider When They’re Lending You the Loan

Have you found the house you’re looking for? Are you and your family ready to move in and make it home? If yes, and you haven’t proceeded yet, it could be because of financial constraints. Indeed, most people cannot buy a home with ready cash and depend on the mortgage loan from lenders. A mortgage company in Grand Rapids, Mi, will offer you the required loan amount, but there are many things they need to check before they lend you the money for a real estate purchase.

Real estate is thriving in Grand Rapids, and tourism is one of the money-making sectors in the state. People visit this city mainly for the Grand River and activities such as recreation, lodging, transportation, dining, etc. Tourism directly supports around 250,000 jobs in Michigan, and recently, sports tourism added $55.5 million to the state’s economy. And if you need to buy a property in the city, you need to ready yourself for several things mentioned in the article.

If you are in the process of buying a home and are searching for a mortgage lender, you have come to the right place. This article will focus on how you must improve for the loan easily. There have been cases where loan applications have been rejected for various reasons, and if you want to avoid that situation, you better read the rest of the article.

What do the mortgage lenders look for?

The lenders will analyze your credit report when they receive your application for a mortgage loan. It is not just the credit score they look for; there are many more things they will take an interest in, such as:

Recent applications

If you have applied to another form of credit or debit, they will analyze it too. If you are in some debt and lag behind in the payback period, it will affect your application.

Payment history

The lender will scrutinize your payment history on credit cards, payday loans, lines of credit, and everything else related to your credit report. They will evaluate your payback time and on-time payments, which indicates your responsibility and credibility.

If you have several late and old missed payments, you may have to explain them to the new lender.

Credit utilization

It is something every lender considers before lending you money. The credit utilization ratio is a factor that indicates how much of your available credit is in use at present. If too much of your credit is in use, you’ll appear overleveraged and a risky person to lend money to. Usually, lenders prefer people with credit utilization under 30%—so you know where to draw the line. For example, if you have a credit card with a $20,000 limit, try to keep the balance under $6,000.

Major derogatories

It means any negative marks that make a person look like a risky borrower. These include delinquent accounts, accounts in collections, charge-offs or accounts settled for less than owed, bankruptcy, judgement, etc.

A dispute statement

The lenders will analyze whether you have any dispute statements or pending disputes on your credit report—if you have, it is a negative mark on your application. If you have any pending disputes, it is advised to wait for them to settle before you apply for a new mortgage loan. A mortgage company in Grand Rapids, Mi, will definitely look into these matters, and if you want to get the loan, better settle the disputes as fast as possible.

Are you an authorized user?

If you are an authorized user of someone else’s credit card, it will reflect your credit score. And the primary account holder’s activity will also be reflected on your credit, which means anything they do will affect your credit score. If that person manages the credit well and pays off the borrowed money in time, your score will be better, and things can go the other way.

Some lenders will only consider the account where you are the primary account holder.

These are the things you must keep up to the mark while applying for a mortgage loan.