Do you qualify for today's best mortgage rates?
Equity Now more than ever the existing equity in your home pays a key factor in determining whether or not you are qualified. Your home value is determined by the recent activity in the surrounding market. What have similar homes in your area selling for with in the last 3 months? The increasing number of foreclosures in most areas are driving home prices down. Lenders look to see what they could sell homes they are lending money on if the home owner ended up defaulting and they were forced to sell. (Banks do not want your home. But they take measures to value it properly in case they end up with it.)
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 A very important factor in any loan transaction and one of the first questions the bank asks themselves. "Can this person afford this payment?" The general lending guidelines are if your loan amount is under $417,000 your total monthly debt payments (credit cards, mortgages, auto loans, taxes and insurance) need to be about half of your gross income if you are a salaried employee and about half your adjusted gross income if you are self employed. If your loan is above $417,000 you will need your debts to be 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.
Your home financing is the largest financial decision you may make in your entire life. If you are qualified for the best rates on the market find a company that is upfront and will the value in your ability to show credit worthiness and start a working relationship with them so they can help you achieve your goals.
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 A very important factor in any loan transaction and one of the first questions the bank asks themselves. "Can this person afford this payment?" The general lending guidelines are if your loan amount is under $417,000 your total monthly debt payments (credit cards, mortgages, auto loans, taxes and insurance) need to be about half of your gross income if you are a salaried employee and about half your adjusted gross income if you are self employed. If your loan is above $417,000 you will need your debts to be 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.
Your home financing is the largest financial decision you may make in your entire life. If you are qualified for the best rates on the market find a company that is upfront and will the value in your ability to show credit worthiness and start a working relationship with them so they can help you achieve your goals.
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
1:55 PM
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