by JQ Adams

Created on: February 03, 2009

Today's mortgage lenders are a lot tougher than they used to be and if you are looking to qualify for a new mortgage or a refinancing deal on your mortgage, you may find that you have to do much more work to qualify for the financing.

Many people, especially the first time home buyer may find they get more then they bargained for when applying for a loan. Completing the paperwork and even trying before hand to improve credit score and other information in order to qualify can be a tremendous effort. Going into a loan application blind can be detrimental to your qualifying for a loan.

Here are some tips as to what lenders are looking for on a loan application.

Adequacy - Mortgage lender want to make certain that you have the adequate ability to make payments each month on the interest and principal of the loan each month. Your income will largely affect this part of the process. Lenders also want to be sure that you are capable of paying for all of your property taxes and homeowner's insurance policies.

Track Record - Mortgage lenders obviously want to know how you have paid your debts in the past. This is where your credit score and credit history report come into play. By working to improve your credit prior to applying for your mortgage, you may stand a better chance of proving a successful track record.

Collateral - Your prospective new home will require an appraisal that will assess the value of the home and the relative to the agreed upon purchase price.

Equity - The mortgage lender will take under consideration the amount of money you place towards the down payment of the home. Based on the purchase price of the home, the higher the percentage you put towards your down payment, chances are the more favorable your loan application will appear.

All of the above things together is what ultimately makes your application for financing approved or denied. There is not just one thing that will outweigh the other things. Just because you make a good income, it doesn't erase those negative marks on your credit report. Again, being prepared to face the financing application process is one of the best things you can do to ensure you are qualified the first time. Be ready to produce plenty of information that can be verified to prove yourself worthy of a financed home loan. Typically you will be asked to produce your paycheck stubs and bank statements for varying periods of time, tax returns for the past two or three years, and lots of other information concerning your personal finances.

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