Home Buying: The Lender

It is important to have that preapproval letter in hand before making an offer for a home. Most Sellers now-a-days want to see that letter in hand, manly to confirm that you, as the buyer, is ready, willing, and able to purchase their home. After shopping for and finding the lender that is right for you, there are going to be several things that your lender is going to need from you.

A lender makes their decisions based on avoiding high risk situations and follow guidelines to ensure the sale ability of those loans in a secondary market. The amount of your home loan is based upon four criteria: (1) income, (2) assets, (3) debts, (4) interest rate that you can lock in.

A lender will qualify you based on your gross yearly income – including overtime, part-time, seasonal pay, commissions, bonuses, and tips. They will also include dividends from investments, business income, pension or Social Security, veteran’s benefits, alimony, and/or child support. What’s important is that you, as the buyer, should see what kind of loan you can qualify based strictly on your yearly salary, without the extra bonuses. This is because you know this is a steady income, plus this gives you some wiggle room during the bargaining process later.