Qualifying for a Loan

Getting Started

Are you ready to start the process of applying for a mortgage? The first thing you should do is take a look at your current situation. NASB advises customers to look at their three C’s.

Credit

Your credit score is an important part of getting a mortgage that fits your needs. Generally, the higher your score, the lower the mortgage rate. If it’s too low, it will probably be difficult to get financed at all.

Here is a quick list of what lenders like to see in mortgage applicants:

  • Low debt balances

  • A history of on-time payments

  • A mix of credit use like a car loan and couple of revolving accounts like credit cards

  • Outstanding debt to total available debt

  • Length of credit history

It’s a good idea to check your credit report before buying a home so that you can correct any errors and find ways to improve your score if you need to. If your credit is not existent or could use improvement, take advantage of NASB’s Share Loan to Build Credit History. Simply apply and we’ll deposit $1,000 into a “locked” Certificate of Deposit account for you. Then, make your scheduled monthly payments on time until you’ve repaid the $1,000. In the end, you’ve established some positive credit history, and the $1,000 (plus all the interest you’ve earned) is yours!

If your score is under 640, you can start making some decisions to help improve it.

  1. First, if there are errors on your report, dispute them. That may help improve your credit score.

  2. If you have accounts that are in collections or reporting as unpaid, make arrangements to begin paying off that debt.

  3. If you’ve missed payments in the past, get current and stay on top of making timely payments. The longer you pay your bills on time, the more your FICO score should increase.

  4. Pay down balances on credit cards and other “revolving credit”. High outstanding debt can negatively affect your credit score.

  5. Don’t close unused credit cards. That doesn’t always help raise your score and sometimes may hurt it.

  6. Don’t open any new lines of credit.

Capacity

Capacity refers to your ability to repay the loan in light of your other debts and expenses. A lender may look at your debt-to-income ratio, meaning how much you owe compared to how much you earn. The lower your ratio, the more confident lenders will be in your capacity to repay the money you borrow.

Another consideration in capacity includes funds available to close. What do you have accessible right now to pay closing costs, make a down-payment, and cover mortgage payments for the next few months.

Collateral

Collateral is the last of the three C’s. This refers any asset you have that a lender can take ownership of to pay off debt if you’re unable to make the loan payments. This means that the home you purchase must appraise for at least the value of the loan. That way the lender can recoup any costs in case of a default.

Let's Talk!

To begin the loan process, contact one of our loan consultants today. Click here to download our free guide.