4 Basic Requirements Of A Mortgage Loan

Mortgage loans are one of the most popular types of home loans. There are many different types of home loans, but since the goal for most families is to own a house, mortgage loan and construction loans stand out. The difference between the two is that a mortgage loan is taken when you want to purchase a home and lot. On the other hand, a construction loan is applied when you have or planning to buy land and build a house there.

Either way, whether you aim to apply for mortgage loans Arlington or construction loans, the basic requirements stands the same. There are four major requirements that you need to fulfill. Not being able to mean you won’t get approved for a loan yet. They are dependent on another, and thus if you want to take a home loan, you need to work on all of them. As mentioned earlier, owning a house takes a lot of hard work, commitment, and dedication.

A Good Credit Report

Your credit report is an essential part of your life. It is not just because you need a mortgage loan, but it is also necessary for all your other financial dealings. When it comes to mortgages, lenders have different preferences on your credit score. Most lenders require a score of at least 640. But there are also a few who needs more than that at 680. You are lucky if you qualify for government loans since the minimum is usually 580. On the other hand, your credit history also matters; you need to have a clean sheet. Any bad report you had stayed for seven years; therefore, you should try to avoid having one as much as possible.

A Stable Employment

Another essential requirement you need to have is a stable source of income. You may either have your own business or working for a company. When you are working for a company, the minimum required years is at two. If you are working for the same company less than that, usually you need to wait it out. However, there are some that allow you to have different companies as long as it is in the same industry.

A Sustainable Financial Status

Your finances are of utmost importance to your lender. It determines how much you can shell out every month for your mortgage loan. They will take into consideration your income and your expenses as well as other investments. They will also check on your cash flow so better make sure your bank accounts have no zero or negative balance. Furthermore, you also need to make sure that your credit card is in good standing. They will check on your payments and their status.

A Down Payment

Your down payment is a requirement for every mortgage loan you will take. Usually, they require twenty percent for a down payment. However, there are many lenders these days that need much less than that. But we urge you to pay as much as you can to avoid any future trouble in repayment. Although if you think you can manage it in the future, you can opt for government loans since they are the ones requiring low down payments.