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.)
To qualify for the current market’s best rates the amount of down payment in a home purchase or the amount existing equity helps determine whether this is available to you.
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 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.
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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!
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.)
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.
