How Mortgage Lenders See You
Applying for a mortgage is a lot like going for a job interview. A lender, like an employer, is going to want to see that you’re a qualified candidate, and they’re going to want to prove it to the best of their ability. Instead of a resume though, there are a few things that mortgage lenders look at.
Credit is at the centre of the mortgage universe. Your credit score is the first place a lender starts when they look at a mortgage applicant. This is your first impression – and you want to try and show your best side when going to a lender. For a look at how your credit score is calculated, see our previous article: How Your Credit Score Is Calculated
Your credit will essentially let the lenders know your liability situation. The next step would be to look at your income and assets and how they stack up. Now much like a potential employer will call the past employers to verify a resume, a lender will want to ensure that your income is consistent with what is declared. Ideally you will have been at your job for a couple of years, as having two years of income statements will make a lender’s job much easier. Lenders will also verify income by looking at your past two years of tax returns. Not only does this tell them if you are paying your taxes, but also gives an indication if your income is increasing, staying the same, or decreasing, in which case you may have to explain.
Your assets are everything you own that a lender would count towards your financial well-being, such as a car, house, and so on. A lender will typically want to confirm the value of your home with an appraisal (this depends on the lending situation though!). With your assets, income, and liabilities all laid out, a lender will use these to calculate your debt ratios (link). Lenders will have upper limits that they will lend on – typically 32% for your GDS and 40% for your TDS.
Going this process alone can be daunting, and mistakes can be made that could compromise the entire deal with your lender of choice – yes, even the big banks. The good news, though, is that having a mortgage broker on your side is a big one up on the mortgage application. Not only do you get access to a number of lenders – using the job analogy, instead of applying for one job, you’d be applying to 35+ at once! – but a mortgage broker will make sure that your application is all in order before its even submitted to a lender to review. This ensures that the lender is seeing your best side right from the get go.
Want to land the right mortgage? Go with a mortgage broker who knows what the lenders are looking for and can show you in your best light. The best part is, this service is typically free for those with good credit!
Find out more by filling out a quick, 90 second application at https://www.gtamortgagepros.com/apply-now