7 Things when Submitting a Mortgage Application
4 minute read
January 17, 2019


Now that mortgage rates are rising as the Federal Reserve starts to increase interest rates, people seem to think that rushing into things is a good idea. However, the application process for a mortgage is not an easy one. You need to be very well-prepared in order to increase your chances of securing your mortgage. Here are some things that you need to do or keep in mind when you are submitting that application.

Prepare Documents

The first thing that you need to do as soon as possible is to prepare all the documents in advance, particularly anything that involves your finances. This is because it’s easy for things to get complicated. These documents typically include a month’s worth of recent payslips from buyers who will be listed on the loan as well as evidence of your tax filings for the last two years. In addition, you will need to hand in three months’ worth of bank account statements, in which you will have to get your explanation ready for any unusual activities on your account if there is any.

The 28/36 Rule

The general rule of thumb for most lenders is “the 28/36 rule.” This means that the monthly payment on your mortgage must be less than 28% of your gross income. However, your revolving debt payments which include other potential loans and monthly installment payments you make. They should not account for more than 36% of your gross income. You need to note that this is not a fixed rule. The numbers can vary depending on the lenders. Still, you should be wary of your loaning habits.

Know the Market

It is important that you understand the market that you are buying your property in. For example, in a state where there are many condominium projects that have gone bankrupt, lenders will be a lot more strict. Most of the times they will ask to see not only your finances but also the finances of the building. Even worse, they might even ask for a ridiculous sum for the down payment. If you want to make sure that you are buying in the right market, make sure that you consult a real estate professional before you decide on anything.

Improve Your Credit Score

Your credit score is one of the biggest determining factors. It will decide whether or not you will get approved for a loan. This is why you need to be aware of your scores from the major credit bureaus. Some credit card companies offer customers free credit scores while others might require some payment before they can give out this piece of information. If you’ve got a subpar credit score, you might want to make an active effort to raise it. One thing you can do is to make sure that your credit reports are correct. If you think that there are mistakes, then be sure to settle those problems right away. Also, if there is a balance that you can pay off, making sure that you settle your debt first. As it can help your score as well.

Reduce Your Debts

As previously mentioned, your total debts should not account for more than 36% of your gross income. Therefore, you will want to lower the amount by paying off as many standing debts or loans as you can.

Prepare Tax-related Documents

Again, you need to have your two years’ worth of federal taxes. Turns out, as a lender will almost always ask to see them. You will also have to sign a release that allows your lender to verify the information with the Internal Revenue Service (IRS). There is a most important thing to remember while doing this. It is that the documents you give your mortgage company must be the same as the one you sent to IRS.

Do Not Create More Debts

Once you have secured approval for a loan, you still need to be cautious about your purchasing activities. That is because your lender keeps tab on your finances until you get the green light. If you plan to invest in something big, such as a car or new pieces of furniture, it is best to wait until the your process finalizes. You do not want to create more debt and potentially sabotage your loan.

The Aceland Mortgage provides mortgages in New Jersey that are fair & affordable. Get in touch today to see how we can help with submitting your application!

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