The process of loan approval today is not the same as it was years ago. Due to the housing crash, lenders are now more careful when evaluating home loan applications.
Here are some things underwriters want to see in your Utah home loan application that may surprise you:
Whether You Paid Down Your Previous Mortgage or Not Doesn’t Matter
For underwriters, it’s not important if you are refinancing an existing mortgage. The truth is they don’t want to discover that you’re paying down your principal by paying more than the required regular payment for your existing loan. Don’t worry, though. This won’t affect your chances of getting approved.
They Make Lots of Money from You
You may not be aware that your mortgage broker earns from your loan’s front and back. The front is what borrowers see most of the time. Money is made on the origination fee that always appears on good faith estimates. The back pertains to your interest rate, and your broker also makes money from it. When you hear brokers claim that there are no origination fees, it only means that they will only dump all their fees on the back. They’ll charge you with a higher interest rate than what they can get for you.
Student Loans May Not Be Included in Computing Your Debt Ratio
If you have deferred student loans, these may be excluded when computing your debt ratio. The logic behind this is that you have graduated from college recently. You would land a stable job with a good income soon. But, there is no guarantee that this is always the case.
Even with Collection Accounts, You Can Still Be Eligible for a Loan
As long as you have a decent credit score, underwriters will overlook your collection accounts like an old utility or mobile phone bill. Unless the amounts involved are excessive or under a judgment, they wouldn’t bother to comment on it.
When applying for a home loan, be ready to provide your lender with a lot of information. Remember, you’re looking to borrow a huge amount of money. Expect them to ask for lots of documentation.