Key factors that can secure a good Mortgage Loan

When one applies for a loan, the lender will review the application before determining the eligibility of the applicant. While an applicant may not have a direct influence on the decision on an application, one can always take measures to try and improve one’s chances to get a good mortgage loan. Here are some key factors that must be taken into consideration before one can begin the application process:

Credit score:

The credit score plays an important role in influencing one’s loan application. This is no different for the mortgage loan. Most lenders will review the credit score in order to determine the risk level an applicant possess. Apart from this, the credit score also determines other factors of the loan, such as mortgage loan interest rates, terms, and conditions that will finance one’s loan. Therefore, it is crucial that one take’s steps review one’s credit report before applying for the application. At least 6 months before one plans to invest, one should check the credit score for any mistakes or inaccurate information.

Size of down payment:

Most loans require a down payment, and this is no different mortgage loan. When one invests a down payment on a property, the loan amount gets affected. Additionally, this also affects the decision of one’s lender, as it inspires the required confidence that one can manage the loan on favourable terms. Therefore, depending on the amount that is being invested, certain mortgage loan rates such as the mortgage loan interest rates are calculated. As a rule, the standard amount is 20% of the overall loan amount. However, the ideal rate to influence one’s loan factors is to increase this amount to 30%. This percentage may also differ from lender to lender.

Employment history:

The credit report assists lenders to determine how well one has managed one’s finance in the past. The employment history, on the other hand, determines how much one can manage a loan in the future. As a large part of one’s income determines the loan repayment amount, the employment history determines the stability one has in one’s profession. This will help the lender determine how much of a loan amount an applicant is eligible for. Additionally, it will also assist a lender to make certain decisions pertaining to certain mortgage loan rates such as the interest rate and repayment tenure.

Current debt

The mortgage loan is one of the biggest loans in the financial market. Therefore, it comes as no surprise that lenders are wary of investing such a loan in applicants that do not provide the same confidence of managing the loan. Therefore, lenders will consider the applicant’s current debt and financial obligation to the additional loan debt before reviewing the loan application. To avoid such a situation, one can take steps to pay off any previous debts or avoid opening any new lines of credit before applying for this loan.