It's important to remember a mortgage is a very large amount of money which is repaid over a very long time and has much lower interest rates than other kinds of loans. This is possible only because the loan is secured by a residential property. Everyone's situation is different. Everyone's mortgage objectives are different. Approval of your application always depends upon how your financial situation compares with the lender's approval criteria.
All lenders utilize four major elements in reaching their decision.
How these elements blend together for you will determine what mortgage programs are available to you, whether you will be approved, and what your interest rate and discount points will be. This means the property must be typical for the area and be in good shape. To determine value, lenders will normally use the lower of the purchase price or appraised value. The appraised value is an independent opinion of market value, which considers the location and condition of the property, its relationship to the neighborhood and recent marketing trends in the area. With the exception of VA, all mortgages require some amount of down payment.