When looking to buy a home, getting approved for a loan can be one of the most frustrating and stressful parts of the process. Many people do not understand the factors that will be at play, and can struggle to get a good idea of their prospects for receiving a loan. One thing that all potential home buyers should be looking at are the factors which determine who is eligible to receive a loan: the mortgage overlay.

Mortgage overlays are the rules and guidelines that lenders use when evaluating potential candidates for loans. There can be several layers of these if you are looking to get a loan. For example, many loans are set up by the federal government, but the federal government is not the entity actually giving the loan. The government sets up its requirements for loan eligibility, and then passes these down to the lenders. The lenders then have a minimum for the loan requirements. If you want that loan: you have to meet those requirements. The requirements are often things such as minimum credit scores, down payment requirements, and documentation.

However, the lender has the option to add more stringent requirements to the loans it disburses. Individuals may then have to meet a higher level of financial security in order to qualify for a certain loan from a certain lender. This means that even though you may meet the federal requirements for the loan, you still can be denied if your lender has additional requirements.

You can use this knowledge to your advantage. If you are looking to get a loan, having conversations with multiple possible lenders can help increase your chances of being successfully approved. Finding out what types of requirements will be needed to have a good chance of securing a loan from a particular lender and comparing these to those other lenders look for can give you the best chance of applying for a loan from a lender who will be examining your financial strengths.

Many people get caught up in the excitement of looking for a new property, and forget that a lot of the time, having a good outcome is the result of meticulous planning and preparation. Mortgages can be with you for a very long time, so it is in your best interest to take the time and do your due diligence in terms of understanding what you can do to get the best possible loan.