What You Need to Know to Qualify For a Mortgage
You have decided to buy your first home and are excited about the prospect. You now need to find out if you qualify for a mortgage. When you sit down with a lender at your financial institution that person will take a careful look at your debt-to-income ratio. In order to be accepted for a mortgage you must have a debt-to-income ratio of 28:36.
What does 28:36 mean? In simple terms this means that only 28 percent of your income or less is allowed to go towards your mortgage payments on a monthly basis. As well, only 36 percent (or less) of your income can be put towards other debts such as your car payment, personal loans, credit cards, etc.
If you do your calculations then this should leave you with approximately 64 percent of your gross monthly earnings which can then be spent on everything else you need including food, transportation costs, taxes, insurance, utilities and savings.
If you have much less than 64 percent of your monthly income to spend on the aforementioned necessities of life then you would be smart to put your plans to apply for a mortgage on hold until you are able to improve your financial picture and save some money.
The mortgage payments you have are tied in with the amount of money you put down. The higher a down payment you have, the lower will your mortgage payments be. This is the way mortgages work.
The more money you save up, the larger your down payment will be and this decreases the amount you will have to pay on your monthly mortgage. Try not to let your disappointment get the best of you- instead take action and get proactive with the money you are earning! The mortgage could be right around the corner for you.
If you are fortunate enough to have a debt-to-income ratio that qualifies you for a mortgage then make sure you are prepared when it comes time to fill out the mortgage application.
What will do you need to bring with you to apply for a mortgage?
You will need:
-The sales contract (signed by both yourself and the sellers)
-The money for a down payment
-Your SSN (and your spouse’s too)
-The address of all of the places you have lived for the past two years (this includes the names and phone numbers of your landlords)
-A pay stub that shows how much gross income you have made in that year so far
-A list of all of your places of work and employers names in the past two years
-Something that shows how much money you have earned in the past two years
-A list of all of your places of work as well as employers’ names for the past two years
-Two years worth of W-2 forms
-Names of all of the banks you deal with and bank account numbers
-Bank statements (going back three months)