Application decisions

Throughout the loan application process, you will be asked to provide extensive and detailed information relating to your finances past and present. All of this information weighs in on some level as your application is being considered. Approval criteria are not set in stone; they vary considerably from mortgage lender to mortgage lender.

That said, as any lender reviews your paperwork, they will try to answer two questions. The first is whether you have enough money to pay the loan back; the second is whether you have the inclination to pay it back. If the information you provided during the loan application process points toward an affirmative answer for both questions, then you are far more likely to receive approval.

For instance, as your lender considers whether you have enough money to pay back the loan, many different kinds of information will be considered. First and foremost, your income is examined. Your lender will think about the money you make now as well as your earning potential for the future. Additionally, supplementary income (such as returns from a mutual fund) and savings will be factored in.

With regard to your inclination to pay back the loan, lenders will look to your past dealings with creditors. Have you paid your bills on time? How much money have you borrowed in the past? How much of your current income is devoted to debt repayment? In general, lenders believe that your previous dealings with creditors provide a pretty good indication of how you might deal with them.

As you progress through the loan application process, keep those two questions in mind. Always remember that you are trying to give the impression that you will be a responsible borrower.