Do you qualify for today's best mortgage rates?
Equity With the majority of the country in a declining real estate market the amount of equity you have in your home plays a major factor in your loan qualification. Homes that are similar in size to your home and are in the same vicinity determine the current value of your home. What have the homes that have recently sold in your area gone for? Most homes are losing value due to the rise in the current foreclosure market. If the bank had to foreclose on a property they need to be able to sell it for what the market supports so this is how they value it. (Bank foreclosures are not in the interest of the bank.)
If you are looking to purchase a home or refinance your existing home into a lower rate or different loan program the amount of equity you have in the property is one determining factor for what loan programs you qualify for and if you can get the best current market rate.
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 Personal liquid assets are a qualifying factor for a mortgage and also to qualify for the best rates available. If a borrower can afford the loan but has no room for error if something happens in their life that they can not predict such as medical bill or unplanned travel they had not budgeted for they may have to forgo paying their loan to make money available for something else. The mortgage bank will ask that you have between 2 and 6 months worth of mortgage payments saved up that you can access if needed.
Credit Score Assuming all your other qualifying factors are in line 720 seems to be the magic number to qualify for the lowest mortgage rates available. Most consumer credit reports are only from one credit bureau but this is not how lenders gauge your credit. They look at the three major bureaus (Experian, Equifax, and Transunion). Some creditors only report to one bureau so the scores at each are usually different. As a standard practice all lenders look at all three scores and take your middle score. If you have an 810 at one bureau, 725 at another, and a 650 at the third you will qualify your rate off the 725 score. Your credit score is a way to determine your willingness and ability to repay your debts. If you pay you will be rewarded with better financing options.
These are the main qualifying criteria to for mortgage loans. A great first step when applying for a mortgage is to see how you size up in each of these categories. If you are serious about getting a loan and think one or more of these areas may be in question asking a mortgage professional in the best place to start. Lending experts have the tools and knowledge to help you find a loan that fits your needs. It is our job to analyze your financial situation and work on your behalf to pair you with a bank that will lend to you and give you a loan that benefits your financial future. A home is the largest investment most people make in their entire lives. Make sure you have qualified assistance when making this decision.
If you are looking to purchase a home or refinance your existing home into a lower rate or different loan program the amount of equity you have in the property is one determining factor for what loan programs you qualify for and if you can get the best current market rate.
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 Personal liquid assets are a qualifying factor for a mortgage and also to qualify for the best rates available. If a borrower can afford the loan but has no room for error if something happens in their life that they can not predict such as medical bill or unplanned travel they had not budgeted for they may have to forgo paying their loan to make money available for something else. The mortgage bank will ask that you have between 2 and 6 months worth of mortgage payments saved up that you can access if needed.
Credit Score Assuming all your other qualifying factors are in line 720 seems to be the magic number to qualify for the lowest mortgage rates available. Most consumer credit reports are only from one credit bureau but this is not how lenders gauge your credit. They look at the three major bureaus (Experian, Equifax, and Transunion). Some creditors only report to one bureau so the scores at each are usually different. As a standard practice all lenders look at all three scores and take your middle score. If you have an 810 at one bureau, 725 at another, and a 650 at the third you will qualify your rate off the 725 score. Your credit score is a way to determine your willingness and ability to repay your debts. If you pay you will be rewarded with better financing options.
These are the main qualifying criteria to for mortgage loans. A great first step when applying for a mortgage is to see how you size up in each of these categories. If you are serious about getting a loan and think one or more of these areas may be in question asking a mortgage professional in the best place to start. Lending experts have the tools and knowledge to help you find a loan that fits your needs. It is our job to analyze your financial situation and work on your behalf to pair you with a bank that will lend to you and give you a loan that benefits your financial future. A home is the largest investment most people make in their entire lives. Make sure you have qualified assistance when making this decision.
About the Author:
The Mortgage Wizard writes informative articles about mortgage financing to educate consumers. Here is a resource to see daily mortgage rates online that are below the national averages and geared towards qualified borrowers.
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