While qualifying for a home loan may not be as easy today as it used to be, we will work hard to get you qualified. At Willamette Valley Bank, we look at the following factors when analyzing your loan application and preparing to qualify for a loan:
Your Credit and Credit History
Most lenders leverage automated underwriting systems to determine whether or not you are a good credit risk. These automated systems pull information from one or all of the three primary credit bureaus – Experian, TransUnion and Equifax – and then calculate a score that is used to determine if you are credit-worthy.
For additional information about how credit scores are determined and how your credit score can influence your eligibility for a home loan, at Willamette Valley Bank we recommend you visit the Financial Help Center of the Fair, Isaac website: http://www.myfico.com/helpcenter/ficoscores/. Fair, Isaac maintains the FICO score, which is the standard credit score used by lenders to qualify borrowers based on credit.
Additionally, each of the three major credit bureaus offers helpful information about your credit profile and how credit scores are calculated. They also provide subscription services to review your credit profile. While we do not endorse the services of these credit bureaus, we do recommend links within of their respective websites that provide credit education.
Your Ability to Repay the Debt
We are required to verify a borrower’s income and employment status. During the pre-qualification process, you will be required to provide two or more years worth of income tax returns. We may also contact your employer to verify your employment status and annual income.
More than anything, it is important to be completely honest when you report your annual income. If a lender finds that you misrepresented your income on your application, it can affect your eligibility for a home loan or the interest rate at which you would have qualified. If you are approved for a home loan on the basis of a misrepresentation, you could be found to have committed mortgage fraud. A lender’s job is to find a loan that matches your financial situation and personal goals. This is only possible if you provide us with accurate information.
The Value of the Collateral
The property you own or are interested in buying will be used as collateral for the home loan. The value of said collateral is determined by an appraisal commissioned by the lender. It is not uncommon for you to be asked to pay for an appraisal as part of the cost of securing your home loan.
Before you are approved for a home loan, your lender must confirm that title to the property in question is clear and that there are no claims against the title that would interfere with the legal transfer or the lender’s claim to the property should you default on the loan. Depending on the property’s location, this research can be performed by an attorney and/or a title insurance company.
It is not uncommon to find errors in the public record for a given title to and/or claims against a property. It is the job of an attorney or title insurance company to identify and fix any errors before a loan is approved.