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 If you were lending your money to some one there is a good chance the first question you would ask yourself is, "Will you be able to pay me back." The same holds true for the lenders. For loans above $417,000 they want to see that your debt is no higher than 45% of your income monthly. This includes property taxes and insurance even if you pay them semi annually. The calculation does not include bills not included on your credit report such as cell phone, gas, and groceries.
Assets When determining if a borrower has the capacity to be able to repay a mortgage loan on time liquid assets are taken into account. Most banks like to see that anyone they lend to has a between 2 and 6 months of mortgage payments saved up somewhere in accounts they have access to. This provides a buffer for stability in case someone is between jobs or an unforeseen bill comes up one month. Lenders like to know that someone has enough money saved to be able to overcome unforeseeable events such as paying for car repairs in the event of an accident. Without any assets saved up a person could be forced to reallocate money that typically is used for their mortgage payment for something else.
Credit Score Good credit score and great rate go hand and hand. The better your score the less risky an investment your loan is to the bank because you have proven across the three major credit reporting agencies (Transunion, Experian, and Equifax) that pay your debts back. If your middle credit score from all three bureaus is 720 or above you qualify for the best rates. You have shown them that not only can you afford your loans but you honor them. This helps you qualify for a lower rate because the bank sees you as a stable investment and can count on making less interest on your loan for a longer period of time rather than charging you more interest so they can capture as much of their money back as possible in the event that you do not pay them back.
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 If you were lending your money to some one there is a good chance the first question you would ask yourself is, "Will you be able to pay me back." The same holds true for the lenders. For loans above $417,000 they want to see that your debt is no higher than 45% of your income monthly. This includes property taxes and insurance even if you pay them semi annually. The calculation does not include bills not included on your credit report such as cell phone, gas, and groceries.
Assets When determining if a borrower has the capacity to be able to repay a mortgage loan on time liquid assets are taken into account. Most banks like to see that anyone they lend to has a between 2 and 6 months of mortgage payments saved up somewhere in accounts they have access to. This provides a buffer for stability in case someone is between jobs or an unforeseen bill comes up one month. Lenders like to know that someone has enough money saved to be able to overcome unforeseeable events such as paying for car repairs in the event of an accident. Without any assets saved up a person could be forced to reallocate money that typically is used for their mortgage payment for something else.
Credit Score Good credit score and great rate go hand and hand. The better your score the less risky an investment your loan is to the bank because you have proven across the three major credit reporting agencies (Transunion, Experian, and Equifax) that pay your debts back. If your middle credit score from all three bureaus is 720 or above you qualify for the best rates. You have shown them that not only can you afford your loans but you honor them. This helps you qualify for a lower rate because the bank sees you as a stable investment and can count on making less interest on your loan for a longer period of time rather than charging you more interest so they can capture as much of their money back as possible in the event that you do not pay them back.
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
4:26 AM
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