How does a lender decide whether to approve my mortgage application?

A lender will consider several factors in deciding whether to approve your mortgage application. In California, the law requires lenders to look at your credit score, income, and debt-to-income ratio (DTI). Your credit score is a measure of your creditworthiness and is used to gauge how reliable you are at making payments. Your income is used to determine your ability to afford the mortgage, and your DTI gives an idea of the amount of debt you are carrying relative to your income. Other factors the lender will consider are your employment history, the type of loan you are applying for, and the value of the property you are buying. The lender will also look at the down payment you will be able to make. Generally speaking, the larger the down payment, the more likely you are to get approved for the loan. Additionally, lenders may request additional documents such as tax returns to determine what other payments or liabilities you may have. After the lender has reviewed all of these factors, they will decide whether to approve or deny your loan application. If approved, they will explain the interest rate and other details of the loan. In addition, California’s mortgage law also requires lenders to inform you of any additional costs that may be associated with the loan.

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How does a lender decide whether to approve my mortgage application?

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