818 Mortgage Home Loan Specialist - Step-By-Step Guide to a Mortgage

How To Get A Mortgage: A Step-By-Step Guide

It’s a good idea to learn as much as you can about getting a home mortgage before you get pre-approved with Marcel Garcia at 818 Mortgage & start shopping with a real estate professional.

To avoid wasting time you need to learn the rules of the game & know a bit about the process. Start by working with 818mortgage to get the best possible loan.

In this article, we’ll get you ready to go mortgage shopping by going over 818’s lenders are looking for & the paperwork involved

What are 818 Mortgage Lenders Looking For?

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.

How To Get A Mortgage: A Step-By-Step Guide

Income And Job History

One of the first things that 818 mortgage lenders consider when you apply for a loan is your income. There is no set dollar amount that you need to earn each year to be able to buy a home. Your employment history, your monthly household income and any other forms of money you have coming in, like child support or alimony payments.

Credit Score

Your credit score plays a major role in your ability to get a mortgage. A high credit score tells lenders that you make your payments on time and that you don’t have a history of borrowing too much money. A low credit score makes you a riskier borrower, because it tells lenders you may have a more complicated history.

The minimum credit score is 620 for a conventional loan. For a government-backed loan minimum is closer to 530, 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.

Debt-To-Income Ratio (DTI)

Similarly to income and credit score, your debt-to-income ratio is a strong indicator used by lenders to determine if you have the requisite cash flow to qualify for a mortgage.

Your DTI is calculated by taking the total minimum monthly payments and dividing it by your gross pre-tax monthly income. The types of debts that you’ll need to factor into your DTI will be recurring, such as credit card statements, student loans and auto loans.

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 50% or less is the benchmark – but many government-backed loans will have higher thresholds.

Assets

Lenders want to know that you have some extra money 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.

Assets include:

Savings accounts

Retirement accounts

Taxable investments

Property Type

Interest rate and buyer requirements vary depending on the type of property (single family home vs investment vs 2nd home vs duplex vs multi family vs mobile vs manufactured vs commercial, etc.).

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What Documents Do I Need To Get 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

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.