Today's best mortgages: How to Qualify
Equity The amount of equity you currently have your is a large factor when determining if you qualify for the best mortgage rates available. The recent sales in your area determine the current market value of your home. Within the past 3 months what have the houses surrounding your home sold for? Home prices are being driven down in most areas by all the recent foreclosures. Lenders judge home value based on what they could sell your home for if they ended up having to foreclose. (Measures to properly value your home are used to protect the banks in case they end up with your home. But in reality, they do not want that to happen.)
Existing home equity in a refinance or the amount down payment in a purchase is one of the factors that help determine if you qualify for today's best mortgage rates.
Income "Can they afford the new payment if we give them a loan?" This is the first question the bank is going to ask themselves before they agree to extend you a mortgage. You need to be able to document your current income and your income for the two years prior to show you have a history of sustained or increased income. The banks look at your current debt to judge your ability to handle your loan payment. If your loan is under $417,000 they want to make sure that your income is double your monthly debts. (excluding utilities and other miscellaneous debts that do not get reported to the credit agencies. If your loan amount is over $417,000 the same rules apply but they look to see that your debt is at or below 45% of your income.
Assets A borrower's liquid assets are also an important factor. The lender wants to make sure that if there was a gap in employment or a salesman had a bad month they will still have the ability to repay there mortgage. The banks look for between 2 and 6 months worth of the equivalent amount of their monthly mortgage payment saved up somewhere that they can access if needed.
Credit Score Your credit score is analyzed from the three major credit reporting agencies. (Transunion, Equifax, and Experian) You are given individual scores from each agency and lenders will use your middle score as a barometer for rating your credit reliability. Most of the best loan options are available for consumers with 720 middle scores and higher. Your credit score is like a life report card that allows companies that extend credit to make sure that the people they are lending money have the willingness and ability to repay them. This reporting/measuring tool becomes very important when a company is determining whether or not to lend you hundreds of thousands of dollars.
Now that you know what will be looked at when you apply for a loan and if you meet all this criteria you can begin your search to find the best mortgage companies that deliver what they promise. Your home financing is one of the largest investments you will make in your entire life. If you have proven that you will honor your commitments you should get a great deal!
Existing home equity in a refinance or the amount down payment in a purchase is one of the factors that help determine if you qualify for today's best mortgage rates.
Income "Can they afford the new payment if we give them a loan?" This is the first question the bank is going to ask themselves before they agree to extend you a mortgage. You need to be able to document your current income and your income for the two years prior to show you have a history of sustained or increased income. The banks look at your current debt to judge your ability to handle your loan payment. If your loan is under $417,000 they want to make sure that your income is double your monthly debts. (excluding utilities and other miscellaneous debts that do not get reported to the credit agencies. If your loan amount is over $417,000 the same rules apply but they look to see that your debt is at or below 45% of your income.
Assets A borrower's liquid assets are also an important factor. The lender wants to make sure that if there was a gap in employment or a salesman had a bad month they will still have the ability to repay there mortgage. The banks look for between 2 and 6 months worth of the equivalent amount of their monthly mortgage payment saved up somewhere that they can access if needed.
Credit Score Your credit score is analyzed from the three major credit reporting agencies. (Transunion, Equifax, and Experian) You are given individual scores from each agency and lenders will use your middle score as a barometer for rating your credit reliability. Most of the best loan options are available for consumers with 720 middle scores and higher. Your credit score is like a life report card that allows companies that extend credit to make sure that the people they are lending money have the willingness and ability to repay them. This reporting/measuring tool becomes very important when a company is determining whether or not to lend you hundreds of thousands of dollars.
Now that you know what will be looked at when you apply for a loan and if you meet all this criteria you can begin your search to find the best mortgage companies that deliver what they promise. Your home financing is one of the largest investments you will make in your entire life. If you have proven that you will honor your commitments you should get a great deal!
About the Author:
The Mortgage Wizard's goal is to help inform consumers about mortgage financing. Here is a resource to see daily mortgage rates online that are below the national averages and geared towards qualified borrowers.
posted by Credit Counseling at
4:24 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home