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When you’re trying to get preapproved for a mortgage loan, it can be an overwhelming and confusing process. Every situation and homeowner is different, but there are a few parts that remain the same when it comes to qualifying for this particular loan. The experts at Putnam 1st Mercantile Bank in Cookeville, TN, share four factors that go into the qualification process so that you can better prepare for your application.

What Qualifies for Mortgage Loans

1. Credit

mortgage loanArguably the most important factor considered, your credit plays a huge role in determining if you qualify for a home loan. Lenders will look into your overall history of credit and what your current score is. Typically, if you have a good standing history and no large problems, you’ll qualify. However, if you have some issues, your interest rate might increase. 

2. Current Debt

The debt-to-income ratio is important because it shows how much you’ll be spending on other debts each month, in addition to your new home loan. Things like student loans typically won’t negatively impact your qualifications, but, if you have lots of outstanding debt that surpasses your monthly income, it could be a red flag. 

3. Income

Your lender will need the most recent information on your employment status and the last six months of income history. This helps them determine if you’re making enough to make the minimum payments each month to pay back the loan. It’s important your standing is secure so that they have enough information to trust you’re qualified.

4. Assets

While you might not have to pay much up-front with a mortgage loan, doing so will help cut down the cost of your loan as a whole, often making it a lower monthly payment. Even if you don’t do that, the bank will need to know all of your assets to ensure you can pay closing costs and any other fees that come up during the loan.

If you’re interested in getting a mortgage loan but aren’t sure where to begin, contact the team at Putnam 1st Mercantile Bank in Cookeville. Offering a variety of services, from banking and business checking to loan services, the team is well-equipped to help you with all of your financial needs. To learn more about applying for a mortgage loan, visit their website, or call (931) 528-6372 to set up an appointment with a specialist today. 

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