Hey ladies, are you ready to make your dream of owning a home a reality? We know it can be overwhelming to navigate the home buying process, from finding the right lender to understanding the costs involved. But fear not, we're here to help!
Before you take the plunge and contact a lender, it's crucial to understand what lenders look for when you apply for a mortgage. In this blog post, we'll break down the five main things that lenders consider when reviewing your application. From your employment history to your credit score, we'll cover everything you need to know to increase your chances of getting approved for a mortgage.
Don't let the home buying process intimidate you! With our expert tips, you'll be well on your way to owning your dream home. Let's get started!
Employment History
Lenders want you to have a stable job and a consistent income. This means that you should have a steady employment history with few gaps in employment. If you're self-employed, you'll need to provide additional documentation to show that your income is consistent.
Income
Your income will be a major factor in determining how much you can borrow. Lenders will look at your gross income, which is your income before taxes and other deductions. They'll also consider any additional sources of income, such as rental or investment income.
Credit Score
A good credit score is essential when applying for a mortgage. Lenders want to see that you have a history of paying your bills on time and managing your credit responsibly. Your credit score will also affect the interest rate you're offered on your mortgage.
Debt-to-Income Ratio
This is the amount of debt you have compared to your income. Lenders want to see that you have a manageable amount of debt. To calculate your debt-to-income ratio, add up all of your monthly debt payments (including your mortgage payment) and divide that by your gross monthly income. Ideally, your debt-to-income ratio should be below 43%.
Cash Reserves
Lenders want to see that you have some money set aside in case of emergencies or unexpected expenses. This is often referred to as a "rainy day fund." Cash reserves show lenders that you're financially responsible and can handle unexpected expenses without defaulting on your mortgage.
Learn More
Understanding these factors can increase your chances of being approved for a loan. But that's not all. In a recent episode of the "Her Money & Investing Show," Jessica Perrone, Founder of Her Financial IQ, Tamika Barrett, AFC®, Coldwell Banker Real Estate LLC, and Open Hand Ministries discuss the expenses associated with homeownership, including closing costs, mortgage payments, furnishing, utilities, and taxes. They also provide valuable tips on organizing your finances and improving your credit score to afford your dream home.
Take advantage of this insightful discussion! Check out the video here: https://youtube.com/live/stcm2TEU5CU
Looking to increase your financial knowledge and strengthen your saving and investing skills? Check out our fantastic HerFinIQ courses. They're designed to help you take control of your finances, make smarter money decisions and invest wisely.
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Dear Friend: This content is for educational purposes only and is not investment, tax, or financial advice. Always do your own research. You are solely responsible for all investment, tax, and financial decisions that you make. Please read the full disclaimer here.