As we mentioned in the video, C.I.A stands for credit, income and assets. We are going to go more in deep in this article about these 3 to learn what it takes to increase our chances of getting pre-approved for a mortgage.
Here are the list of things we’ll have to pay attention to and how everything works:
1. We need to prove our income
Nowadays, we need to be prepared to start the process of getting a loan, by giving all kinds of documentation about the different sorts of income that we may have, such as:
- W-2 statements from the past 2 years
- Year to date income
- any recent pay stubs that show income
- 2 most recent years of tax returns
- Any additional income(alimony, bonuses..etc)
2. We need to prove our assets
In terms of assets, we need to give proof of that we are in a position where we can afford paying the down payment and closing costs, as well as having some cash reserves after that. Normally there will be other requirements such as having to get private mortgage insurance or paying a funding fee, unless we put 20% down.
Also remember that your pre-approval will be based on your FICO credit score, debt-to- income ratio and other factors, and that all loans, except Jumbo loans, are conformed to GSE guidelines.
3. We need good credit
You will find that most lenders require at least 620 FICO score or above to get your loan approved, even for FHA loans sometimes. What are FHA loans? they are those that require lower minimum down payments than conventional loans. For these, as we mentioned in the video you’ll need at least a 580 credit score to get pre-approved. However, if your score is lower, you can still get a FHA loan with a 10% down payment.
If you have a high score (760 or above) lenders will offer you low interests, but if on the other hand, you have a low credit score, don’t worry as lenders will suggest ways to improve your score. The only downside for low score borrowers will be that they’ll have to pay their mortgages in longer periods of time.
That’s all for today, hope you found this content useful and don’t forget to follow Sean La Rue in all social media to stay tuned to all kinds of information about qualifying, real state finance… This has been the first of many articles for Monday Mortgage Madness.