Mortgage Approval Process

Home Buyers and those refinancing, just don’t give mortgage approval a second thought – give it at least 3!

Please visit the mortgage loans page of my website to review the entire process.

Many Americans are still apprehensive and uncertain about qualifying for a mortgage and about navigating the home buying process, according to a new study by Wells Fargo and Ipsos Public Affairs.

Simple steps to the process:

(1) Before talking with any lenders, do a little homework yourself – take your latest pay stub, calculate your annual gross income, multiply that total by 35%, divide by 12 and that should be a rough estimate of your normal monthly mortgage payment including property taxes and homeowners insurance. Remember: Don’t stretch yourself too thin by a larger than normal mortgage payment.

Note: You may hear stories of documentation you’ll need to provide to the lender. Gather together documents that paint a picture of your current financial status such as income tax returns (past 2-3 years), W-2’s (past 2-3 months), 2+ year history of employment, bank statements (past 2-4 months), personal and retirement investment account statements, your history of residence in past 5 years, credit card statements (up to 12 months), active personal, auto, and student loan statements, child support paperwork, alimony agreements and divorce decrees, or bankruptcy paperwork just to name a few.

(2) Next, check online for mortgage calculators such as this calculator to plug in different dollar amounts of loans.

(3) After you have an idea of what you can afford, talk with several lenders (no less than 3) to verify amounts and types of loans available to fit your financial needs. Get a feel for which lender pays attention to your needs. Yes, you can take advice from people you know who just bought homes, even call their lender if they recommend you to do so. Note: Please use my lender comparison worksheet when talking with lenders.

(4) Understand your options (including pros, cons, and closing costs, etc,.) under Conventional, FHA, and other loans.

(5) Discuss what you learned with your real estate agent to discuss more questions and help find answers.

A recent article stated 5 major components of mortgage approval:

  1. Your debt to income ratio (are you underwater?);
  2. the Loan Amount to Market (appraisal) Value of property;
  3. your credit history (been paying your bills…on time);
  4. types of properties (single family/condo/townhome); and
  5. mortgage programs (FHA/VA/Conventional/Special)


References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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