VACAVILLE, CA, Apr 26, 2024—Before you begin your home search, it's important to begin your home loan search. Unless you're able to buy outright, how you finance your home will be just as important—if not more important—than finding the home itself. But what are lenders looking for when considering you as a loan candidate? Below, Stephen Spencer, Bev Dorsett & Sue and Steve Kappel, Broker/Owners of Coldwell Banker - Kappel Gateway breaks it down for us.
Steady Employment
A solid, dependable income is No. 1 on the list for most lenders. “When you apply for a loan, long, steady employment is always seen as a plus,” says Sue and Steve Kappel.
Sizable Down Payment
In addition to steady income, having enough savings for a nice down payment is always helpful, explains Sue and Steve Kappel. Also important is a history of regular savings; the lender wants to make sure you're smart with your assets.
Credit, Credit, Credit
Speaking of being smart with your assets, Sue and Steve Kappel reminds us of the importance of a solid credit stance. “A good credit rating is vital for a good home loan,” says Sue and Steve Kappel.
Consider, too, that credit you have qualified for—say, credit cards—can work against you, even if never used. This is because those credit cards are looked upon as being open credit lines—and while they have not been used, they could be used, and potentially used up to the maximum dollar amount allowed by the credit card companies. As a result, their perceived risk lowers your credit, or FICO, score.
Now that we know what lenders like to see, what will ultimately give them cold feet? Not so good in the lender’s mind: frequent job changes without salary increases, self-employment in a new venture, bad debt history, no previous borrowing record, and dilapidated property.
If you have less-than-stellar credit or a weak down payment, do not be discouraged. “These are standard lender pre-dispositions when evaluating your application, but when it comes to making a loan decision, most lenders will tell you nothing is completely carved in stone,” says Sue and Steve Kappel.
For more real estate information, please contact Coldwell Banker - Kappel Gateway at info@kappelgateway.com, 707-427-5344, or Coldwell Banker - Kappel Gateway.