Shirley Wenger is a professional journalist and editor who has been working in the publishing industry for more than 15 years. She is an award-winning...Read more

When it comes to buying your own home in today’s time, the need of a right home mortgage loan cannot be denied. It becomes the basic and an essential part of investing in your new home, and therefore, it entails the evaluation if several criteria. This criterion can vary from the credit score of an individual to their debt- income ratio and the availability of a down payment. However, humans are subjective, and so is their individual situation. But there are certain major factors which hold true for almost everyone and these are covered here, in-depth, below:

The first and foremost thing that can affect the speed of availing a home mortgage loan is the credit score of a person. It is a number that helps the mortgage loan providers to understand the likelihood of your being able to return the amount of loan you are availing today. They will try and look at your payment, your spending patterns, your credit history, and will determine a particular number for you ranging from about 300 to about 850. The higher this number would be, the higher your chances of availing this home mortgage loan would be. The higher scores would persuade loan providers to have faith in you and will allow them to lend you the amount in a fast manner. In many cases, it has been seen that higher the credit score you have, the lower would be your interest rates. Anything above 600 would determine the same for you.

Down payment is another major factor that determines the speed process of your home mortgage loan approval. The up-front money that you pay beforehand, over the actual cost of your home loan. Ideally, this up-front money is 20 percent of the cost. However, the higher your down payment would be, the less risky you would be seen by the money lender. This always means you will get a better interest rate if your loan is approved. One must always know that saving up for a down payment is always the hard part. This is because of not exactly knowing how much is this amount going to be.

Another factor that determines the speed of your home mortgage loan approval is your debt-income ratio. In simple terms, it is the ratio between your monthly income (before taxes) to the debt you are supposed to pay. The kind of transactions or payments that are considered in your debt-income ratio are- tax, payments for your credit cards, any car loans, student loans, any child support payment, alimonies, etc. To make sure you know the exact ratio between your debt and your income, you are supposed to divide your debts by the pre-taxed income, for every month. If you pay about $400 as your debt every month, and you have an income of about $1200, then your Debt to Income ratio would be determined by dividing 400 to 1200, which will give you 0.33. This needs to be converted to a percentage for better ascertainment, and therefore, you need to multiply it by 100, so here in this scenario, you would get 33.3%.

Your job stability plays a significant role in determining the approval of your mortgage home loan. If you have a stable income coming from a stable job, you are, in the money-lender’ eye, more likely to pay out your debt. Another reason why your job stability is important is that the more your job is stable, the lesser rate of interest you will have to pay. Your employment and related factors thus have a significant role to play in your home mortgage approval.

Shirley Wenger is a professional journalist and editor who has been working in the publishing industry for more than 15 years. She is an award-winning writer and her work has been featured in various publications, including The New York Times, The Wall Street Journal, and Time Magazine.

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