Potential home buyers may be a little daunted by the entire mortgage loan process, especially first-time buyers. Lenders ask many questions about every aspect of one’s financial life and living situation. However, a Home Loan Mechanics Cooperative Bank officer is only trying to make sure that you get qualified for a mortgage, and that you don’t take on more than you bargained for. As such, information about employment, finances, and the home of interest may be needed.
Your income is the first consideration, of course, but the amount is not the only consideration. Lenders want to know how this money is made. Salary is different from bonuses and commissions that can fluctuate each year. The loan officer will examine a household’s expenses and how a fixed mortgage payment, insurance and property taxes falls into place. These housing costs should not be more than 28 percent of one’s income. They’ll look at outstanding debts such as credit card bills, car loans, and student loans.
Another major factor taken into consideration is the applicant’s employment history. Lenders tend to favor those who have held a steady job for at least two years. However, some fields require constant job change such as actors, freelancers, and consultants. This fact will be balanced with earning history. The credit score will be taken into account because the lender considers it indicative of how timely people pay their bills. They want borrowers to make mortgage payments on time.
A borrower’s assets are also in the mix. Lenders will want to know about bank accounts, investments, property, jewelry, retirement funds, life insurance policies, and any business assets. Ultimately, this collected information goes to a loan underwriter who makes the decision whether or not it is worth the risk of funding a borrower versus the reward for the investor who offers the loan.
All firms have different underwriting guidelines based on their own statistical models, including the Home Loan Mechanics Cooperative Bank offers. Generally, they will look at one’s ability and willingness to pay, plus they will examine the value of the collateral, which is the house and property. The property itself acts as insurance in case the borrower defaults.