Qualify For A Mortgage Q & A

    Most people know the benefits of buying and owning a home.  But a lot are unaware of what it takes to qualify for a home loan.

    We hear all time the ups and downs of the housing market.  Now more than ever there is a lot of confusion about getting qualified for a mortgage loan – and a lot of misinformation as well.  Let’s try to clear that up a bit for you.

    White mortgage underwriters look at a lot of different information to determine whether or not you will qualify for a mortgage loan, ultimately it comes down four things: your credit, equity, your income, and assets.  Here we will break down each qualification factor and make it easy to understand and learn some quick tips for making sure you have all your ducks in a row.

    1. Credit –  Most people are unaware of their credit.  This is how lenders judge the likelihood that you will pay them back, and pay them back on time.  To do this, lenders will look at the length of your credit history, if you have one at all, how reliably you have paid on your loan accounts, and if you are maxed out on any credit cards or loans.  Your credit score itself is what is used to determine if you will qualify and how much interest you will be charged.  Check your credit on creditkarma.com for free today.

    2. Equity or Down Payment – The minimum required down payment when buying a home today is ususally 3.5% of the sales price which would allow you to get a FHA loan, a great option for first time buyers or someone who may not be able to come up with a huge down payment sum all at once.  When buying a home, keep in mind that you will not only need the funds for a down payment, but will also need additional money for settlement fees.

    3. Income – Another factor lenders look at is your debt-to-income ratio, or (DTI).  Put simply, this is your fixed expenses with your new mortgage compared to your gross monthly income.  Lenders typically want to see you spending less than 50% of your monthly gross income on these fixed expenses such as your mortgage, property taxes, credit card or student loan payments.  Variable expenses such as utilities, phone or cable bills are not included in your DTI.

    4. Assets – Lenders also want to verify that your funds are being used in a liquid account.  They are looking to see that you have an active savings or checking account.  If you like to keep your cash piled up under your mattress or shoe box, you may some problems getting approved for a loan and may want to go deposit all that cash into a checking account. Lenders need to see the transactions you are making, where they are coming from, and there is no way possible to document loose cash.

     

    Keep in mind, there are may different types of home loans, and where one may not apply to you, do not get disheartened.  There are plenty of options available to all people with all different income ranges.  Be sure to research diligently and explore all of your options online, or go speak to a local mortgage agent.

    For more information on Qualifying for a Home Loan visit http://www.quizzle.com/blog/2011/02/home-loans-101-what-you-need-to-qualify-for-a-mortgage-today/

    Also, go and speak with an expert from your local company at Guild Mortgage located in Anderson, SC behind Regions Bank.  Check out their website at http://www.guildmortgage.com/branches/anderson

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