Key Factors in Securing a Mortgage
Experian | November 25, 2013 | link
For most Americans, buying a home is the most expensive purchase of their lifetime, and obtaining a mortgage can be particularly stressful.
Here are key factors lenders may consider when reviewing your mortgage application.
Credit report & score
Your credit report documents your track record of borrowing from and repaying banks, credit card companies and other lenders. It’s crucial that you check your credit report well in advance of a home purchase in order to give yourself enough time to spot any issues that might raise concerns.
Your credit score is a numeric evaluation of your credit risk level. Lenders will review your credit report and score, among many other factors, to make a decision about whether they will approve your home mortgage application.
Credit cards & other debts
Your debt-to-income ratio, or the amount of credit card and other debt you have compared to your income, is also calculated before securing approval from a lender. If you’re carrying a balance owed on your credit cards and other debts, it may impact your credit score.
Experts suggest that consumers should be especially aware of their credit card charges during the months leading up to a mortgage application. Think twice before canceling a credit card, especially an account that establishes a long-term credit history. You’ll also want to avoid applying for new credit during the three to six months prior to applying for a mortgage.