To get a clearer view of the home loan process, it’s helpful to know some of the factors that will be considered when your application is reviewed. It’s the underwriter’s responsibility to review your loan scenario and the supporting documentation to ensure that it meets the loan program guidelines to determine whether or not you qualify for the loan. The underwriter looks at your application to see if it meets these basic criteria:
1. Your ability to repay the loan – This requirement basically asks, “Is your income enough to cover the new mortgage payment and all your other monthly expenses?”
2. Your likelihood to repay the loan – Your payment history and credit score indicators tell lenders of your likelihood to make timely payments in the future.
3. The home value – The underwriter carefully looks at the home value (based on a professional appraisal ordered by your lender) of the property you are purchasing or refinancing to verify that it meets or exceeds the purchase price or outstanding mortgage balance. This will also help them ensure the property and Loan-to-value fits within the loan program guidelines.
4. For a purchase, the source of funds for your down payment – The underwriter will verify your funds for the downpayment and review your documentation to estimate whether you have enough money to cover closing costs. You may also be required to have set aside monthly mortgage payments as reserves. Lenders typically require reserves to cover your mortgage payment in case of emergencies or unforeseen events. If you are refinancing and don’t exceed the lender’s maximum loan-to-value limit, you may be able to finance some or all of the closing costs instead of paying them out of pocket.
As you move forward, keep in mind that your income, debt, credit history, down payment and savings (if applicable), the home’s value and your loan program’s guidelines will all play a role in whether your loan application is approved. For complete mortgage loan program details and to find out if you qualify, contact us today at 888-488-3807 or go to www.OneTrustHomeLoans.com.