4 Things to Know About Mortgages

Aug 9, 2016 Beautiful Home Exterior


The mortgage process keeps evolving in order to protect banks and to give customers more disclosure. A better product comes with stricter guidelines and more documentation. Knowing about the following four items will help you prepare for the mortgage approval process.

Credit Score

You need to know your credit score because it will determine the down payment. Traditionally, your goal should be a score of at least 700. Factors such as a too many open accounts, high balances, and accounts that haven’t been established long enough can affect it negatively. A score under 550 counts as poor, 600 to 650 is considered fair, and anything over 720 qualifies as excellent.

Down Payment

Depending on the type of loan, the financial institution, and your credit score, the down payment usually ranges from 5 to 25 percent. Lenders require this money to have been liquid for at least 60 days in the account that you’re using for the down payment. You’re allowed to consolidate amounts from different accounts into one, but you must be able to prove that the money has been in the individual accounts for at least two months.


Depending on credit score and product, you might need to have reserves on hand to show that you can make the payments for at least three months to protect against default. Lenders might require up to a year’s worth of mortgage payments as assets. These funds have to come from approved sources like bonds, stocks, 401K, savings or checking accounts.

Loan Approval

Loan approvals can take anywhere from 30 to 45 days and depend mostly on the responsiveness of the buyer. If you’re not prepared, this will delay the process. Additionally, once the loan process has started, you’ll have to acknowledge a variety of emails. Know about your credit score, down payment, assets, debt and income, and what you can expect beforehand can make the process much smoother. Beaches Title has helped hundreds of clients. Contact us today.