Applying for a mortgage loan can be an overwhelming affair. A large loan can be a burden on a person’s finances but the lender will not grant the mortgage unless he can be 100% sure that the borrower can return it with minimal difficulty. For a lender, a good loan is given when the borrower is willing and able to pay. Here are some basic requirements for granting you a mortgage loan.
You must have a decent credit rating
This will determine your willingness to pay. If you have a good credit record, show that you are fiscally responsible and therefore you are willing to pay your bills. Your credit report which includes your credit score determines your ability to repay your debts. If you have a low credit score you will not be considered a good candidate for a loan. Proving that you are responsible by having a good record of debt payments will be a great advantage to be approved for a loan.
Your home has to be located in Mexico (or the one you are buying) and you will generally need to advance 5% of the value as an advance. Normally, the down payment comes from your savings but can be considered other forms, such as a family gift or other loans. It will depend on the criteria of your lenders for the mortgage. You can put more in advance if you want to take less time to repay the entire loan or have lower monthly payments.
You will also need to prove that you will be able to pay
You will have to have a stable employment history to show that you have the income to repay the loan. A lender will find someone with stable employment over 2 years as a much more favorable candidate than someone with an unstable employment history. This will prove that you have the ability to repay the loan with your income. Generally, your monthly housing costs should not be more than 32% of the family’s income.
The amount of total debt is also important. If you have a loan of studies or a credit card your total debt should not be more than 40% of your income. You will need to have a relatively low debt to income ratio to prove that your income can easily pay off your debt. It is important to remember that the lenders want to lend you money but you will need to show them that you can and will do it.
Another thing to consider are the closing costs, which include legal fees, insurance, taxes. These costs allow you to buy your house easily but can add between 1% and 4% of the price of the property.
The bottom line is that you should be able to prove that you are able to repay the loan. Housing can be a great investment but it will not be if you do not have the resources to pay for it.