If you’ve finally had your eyes on your dream home and are ready to make one of the biggest purchases of your life, few will pay with cash but most will have to get a mortgage loan from their lender. While this process used to be looked at as tedious and time consuming in the past, with automation and the use of AI and machine learning, it had been cut down to minutes. But before hitting the apply now button, we have to reassess if we qualify for this huge loan. When looking over a mortgage application, brokers or lenders look at a few criteria on your credit report to see if you qualify for and are capable of taking on this loan.
The mortgage process begins with viewing the client’s record of objectives, circumstances and any other relevant information regarding their request. Financial institutions will look closely at your credit report when reviewing your mortgage application. When looking at the credit score, they will look to see if you have recently applied for any other forms of credit or debit, any recent applications, payment history and any lines of credit that show up on your credit report. Lenders want to ensure that you have a consistent track record of fulfilling payments on time to provide them with confidence that you will be a responsible borrower. If you have any missed or late payments, they may ask you why this occurs. They will also view your credit utilization ratio to see how much credit you are consuming over time. Depending on this ratio you will be considered as more or less risky, as most brokers/lenders prefer your utilization be under 30%.
They will see on your report if you have had any previous bankruptcy, judgement, delinquent account, charge off or an account settled for less than what was owed. Mortgage lenders make sure to see if there are any pending disputes or previous statements of dispute as it can hold up the mortgage process and it is advisable to resolve the dispute before you apply for a mortgage.
Once the lender does the research, the home buyer during this process is advised to research lender rates, loan availability and access affordability. Once decisions are made on the lender, the documents have been processed, the lender will then advise clients on the products available and their cost differences. With an issue of the statement of suitability application and documentation submitted, approval, request valuation, there will be a loan offer and other policy documents. The solicitor completes any legal work, the purchase is closed and the mortgage loan documentation is returned to the client.