Applying for all loan types, including VA loans, requires qualification before you can fund your chosen property. This qualification makes people worried, especially those who will apply for a loan for the first time.
The truth is knowing some things about the qualification process will make the process simpler and keep buyers from extremely worrying about the process. If you’re planning to apply for a loan, the following are the best things you need to know about mortgage approval.
Qualification Shouldn’t Be as Difficult as Expected
Most people worry about qualification process and complex procedures. The truth is the process is not as difficult, especially for those who have good credit scores and with complete documents submitted for loan application. Lenders respond positively to people who have good credit score. A person with good credit score is perceived as someone with the money to pay all his bills and responsible enough to meet his financial obligations.
Complete documents also help people get qualified as soon as possible. Lenders’ underwriters check these documents and they can’t decide if one of the documents is missing. This is one of the thing that will pull a person back from getting qualified for a mortgage since underwriters don’t have the right documents needed for making a decision.
Some Elements May Pull You Back from Loan Approval
As mentioned above, the absence of a document or two will slow down the mortgage application and approval process. However, some other elements may also keep a person from getting a loan. A common element is the absence of verifiable income source. Some people applying for loans don’t have work records since they are doing freelance work. Freelance work means a client doesn’t have an HR department who can provide employment certificates. Even if the work is stable, lenders won’t see freelance work as impressive as those who are actually working for a company.
Another element that may keep people from getting loan approval is inconsistent financial activities. A good example is large amounts of money transferred to a person’s account. Lenders are wary of these activities due to possibilities of fraud. This is where experts recommend borrowers to avoid transferring large amounts of money to their accounts before they get qualified.
So, consistency on all documents is crucial to get qualified for mortgage.
Perfect Doesn’t Mean Approval
Mortgage lenders are impressed with people with excellent or good credit record. However, some people who have these perfect financial credentials fail to get their loans approved. This is due to other elements like inconsistent financial travels, lack of verifiable income source, and consistent work experience.
Knowing this lets applicants know that a perfect credit record doesn’t mean immediate approval. Experts recommend applicants to be careful in doing financial transactions since a simple inconsistency may affect their chances of getting loan approval.
Approval is on Lender’s Discretion
A client may have complete documents, but lenders may still not approve his application. This is due to lender’s discretion or the lender’s right to approve or reject loan application. Lenders may see perfect credit score or have complete documents on hand, but lenders may not feel that approving a client’s application is good for this business.
Lenders’ discretion to approve and reject loan relies on their underwriters. Underwriters are the experts who assess files and decide whether applications will be approved or not. Once they see some inconsistencies or other elements that can affect their business, underwriters won’t approve the loan and borrowers will need to look for another lender who may approve their loan.
A Broker May Help Simplify the Process
A broker working with a borrower will be beneficial since he can look for multiple lenders to give buyers options in getting a loan. Not only will borrowers have the chance to save money, they can also get more chances for loan approval since brokers will have a list of available lenders. If they didn’t qualify for a loan, the broker may recommend the next lender for future application.
Overall, loan qualification is not as difficult given that you have good and consistent financial profile. This is the same for traditional or private mortgage lender. Clients must work with a trusted lender or broker to boost the chance of getting loan approval and start investing.