Qualifying for a Mortgage

Some lenders may require you a certain debt to income ratio before giving you a mortgage. A debt to income ratio is simply the ratio of the percentage of your monthly income that may go into the mortgage over the percentage of your monthly income that may go to your total debts. If you have a debt to income ratio of 28/38, this means that not more than 28% of your total monthly income may go to housing, and not more than 38% of your income may to all the debts you have.

So if you have a $2900 monthly income and have a 28/38 debt to income ratio. You can afford to get into a mortgage that has a monthly payment of $812, according to the 28% limit. However, if you have other debts like for example a $300 monthly car payment and a $150 student loan payment, your total debt is $1,262, which is 43.5% of your monthly income and over your total debt value of 38%, due to this, you cannot get the mortgage that is worth $812.

In the world of mortgages lenders dont just look at your debt to income ratio, in order to give you a mortgage, lenders look at your credit records, your employment records, to make sure that you will be able to pay back your loan. They look at how stable you are to make sure that their investment wont flop. They mostly look at overdue credit card payments, or other overdue payments, or any other previously failed debt payments.
Aside from credit records, they will look at your employment records, if you have been steadily employed for the last two years, extra income, like self employment, part time etc, will also help you qualify for loan.

Remember, pre-approval is different from pre-qualification, the former is probably much better. Pre-qualification simply means that your lender has assimilated your credit information and has given you the estimate of what type of mortgage payment you can afford. A pre-approval however means you much closer to the actual mortgage loan, meaning your lender has pulled out your credit information, and has done a more thorough analysis of your state, this is obviously much closer to the actually approval of the loan.

You may also think of what you can afford, usually long term mortgages like 30 year fixed rate mortgages, have lower monthly payments, but require a larger interest rate, however, youll be able to pay off your mortgage for a longer period, and in lower values.

It wont be bad to try and look good for the lender, so when you apply for a mortgage youll need several documents, be sure to have these with you when you apply for a mortgage.

1. money for the Closing costs
2. Completed sales contract signed by the buyers and the sellers
3. Social security numbers of all applicants
4. Complete address for the past two years
5. Name, address and all income earned from all employers for the past two years
6. Previous two years W-2 forms
7. Most recent pay stub showing year-to-date earnings
8. Name, address, account number, and balance of all deposit accounts, stocks bonds etc.
9. Three months most recent statements for deposit accounts, stocks, bonds etc.
10. You may choose to include income from child support and alimony, bring copies of court records of cancelled checks showing receipt of payment

These are the basic things youll need for a mortgage, your lender will give you a more detailed list and your closing attorney will assist you with the needed documents.