Best Asset - Your Credit History, Not Score, Will Get You the Loan

Since the implementation of stricter loan terms and guidelines, the mortgage industry has never been more wary of possible losses or bankruptcies. Not only are lenders holding tighter reins on loans but borrowers are finding it exceedingly more difficult to even qualify for a new home loan.

In today's market it is necessary for lenders to employ more rigorous regulations when factors like market instability, increasing unemployment, and the floating economy are being considered in the mortgage process. This type of lending process has become a double-edged sword, since the mortgage industry needs to close loans, but a large majority of industry professionals are having trouble clearing borrowers.

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Under new guidelines and procedures, everyone is being dragged into the instability pool. It is not always the borrower's fault that discrepancies and delinquencies arise during the loan process and unfortunately, most lending institutions require that more paperwork be submitted and additional verification of the borrower's credit history and capacity to pay will have to be examined.

What It Takes to Get a Loan

At this point, a good credit history gives the borrower the best chances of getting a loan, even if the borrower has a low credit score. It is more important for lenders to see up-to-date payments in the borrower's credit history than how high the credit score is rated.

There may be additional materials that are needed to strengthen the borrower's lending worthiness.

Some of these include:

Pay stubs from the past 30 days W2 forms for the past two years Bank account(s), retirement account(s), and investment statements for the past 60 days For self-employed individuals: two years of tax returns if 25 percent of the borrower's income is from commission or bonuses. For borrowers wanting to buy a new house and rent their old: Signed lease for a minimum of 12 months. The 75 percent of the rental income can help in the qualification in application. However, 30 percent equity of the former home is a must.Overall, when getting a home loan in today's market, it is the dependability of the borrower that will have the greatest impact and it will reassure the lenders when borrowers have kept up on their financial obligations and responsibilities in the past.

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