The Mortgage Mystery-What Do Mortgage Lenders Actually Care About?

For years, getting a mortgage has felt a lot like playing the lottery, will I be the winner? Nobody could really tell you what you needed to do to get your mortgage approved...until now!

Did you know that when it comes to getting a mortgage, lenders are looking at 4 main categories? They are evaluating your:

• Credit

• Income

• Debt

• Savings

Now that you know what they're looking at, let's break down what that actually means.

Credit

Ideally, the lenders are looking for a credit score over 680. They would like 2 items reporting on your credit bureau for at least two years. If possible, it's good to show the lenders responsibility with larger sums of money so a higher credit card limit (when used responsibly) looks better. When evaluating your credit they are also looking to see if all payments were made on time and for the amount they were supposed to be.

Income

Reliable income is one of the bigget factors in determining if the mortgage will be approved or not. Lenders like either guaranteed regular income or 2+ years in the same industry if the wage and hours are not guaranteed. This allows mortgage lenders to see if your income is stable and therefore if you'll be able to make your mortgage payments.

Debt

Most people have debt, which isn't necessarily a bad thing as long as it's managed. When looking at adding a huge financial responsibility in the form of a house, lenders want to ensure you will not be overextended with your current financial obligations. The government had to add maximum allowable debt percentages (GDS & TDS ratios) because too many people overextended themself.

Savings

The last thing the lenders evaluate are savings. If you have a history of being able to save money with your current income and debt, it adds confidence to the lenders that you'll be able to handle the additional mortgage payment. With this high level of financial responsibility it also provides peace of mind that if a home repair or emergency comes up that you'll be able to handle it.

There you have it, the 4 categories that mortgage lenders are reviewing when looking at your mortgage approval. If you are ready to begin the mortgage process but have been scared of getting declined, reach out to Grande Prairie's top mortgage broker, GM Mortgage Team!