There are a few different pieces of information required for a mortgage approval. Of course, the process may become more difficult as individuals have less money to put down on the mortgage, or are financing larger amounts, such as jumbo loans. In general, however, the process is not too difficult, and requires a completed application, verification of employment and level of income, and a credit history run by the bank. In regards to the home, the bank will need to appraise it, and ensure that the value of the home matches the value of the mortgage, or if it is a home equity loan, that the equity actually exists in the home.
The mortgage approval process will be completed with a lending officer at the bank, who is there to assist borrowers in completing the paperwork and check that they provide all the necessary data. The application will require standard items such as name, address, and birthdate, as well as information about employment history and current employment. This can help the bank to determine if the borrower is a good credit risk. Borrowers might need to provide bank statements or tax returns as well. In addition, he or she will need to authorize the bank to run a credit report, which will show a credit score as well as credit history.
A solid credit history is very important for mortgage approval; poor credit can lead to an extremely high interest rate, or the bank refusing to approve the loan altogether. It is important to show that other debts, such as credit cards, are paid down or eliminated entirely, and that previous loans have been paid as agreed. Some banks might also request that borrowers provide references as part of the mortgage approval process, though this will usually only be required with larger loans, or for customers with questionable credit histories.
Aside from all the personal financial information, a mortgage approval will require appraisal of the home to assess its value. A bank will not mortgage a home for a greater amount than it is worth. A home equity loan, which is a second mortgage, will require the same approval process because it is possible the value of the home has changed over the years. This can be a positive; if the value of the home has increased, this means the equity in the home has as well, and borrowers may be able to take out an increased loan against it if needed.
