Whether you’re looking to take advantage of a mortgage, as a component of financing a new home, or, if you decide, it makes sense to refinance your residence, for a variety of reasons, including personal finances, getting a better rate, etc. , it is important to begin the process by understanding some of the factors that often become important considerations in the rating process. Since, for most of us, our home represents our main financial asset, does it not make sense to take the time and make the effort to understand and take advantage of the best way to achieve this goal. With that in mind, this article will briefly attempt to consider, examine, review and discuss 5 factors that can affect, if one qualifies, for these loans.
1. Total debt: Lending institutions consider many factors, and one of the key factors is the ratio of total debt to earnings. If this percentage is too high, many will refuse to consider the candidate! These debts include, credit card debt, unsecured loans, other debts and obligations, etc. When you decide to continue, look at this first and try to pay off the debt in full.
2. Debt / earnings ratio: There are only 2 ways to reduce this ratio / percentage. One is to increase earnings / income and the other is to reduce debt. For most of us, the second approach is the easiest to tackle, in a controlled and timely manner.
3. Housing debt to income ratio: There are two ratios, the credit institutions, almost always, consider and examine them carefully. These ratios are not considered recommendations, but are generally hard / strict limits. In addition to being a necessity for acquiring a mortgage, one must seriously realize, if this is too high, how could anyone be comfortable with monthly home ownership maintenance charges!
Four. Credit rating; debt payment: How you have handled your past and / or existing debts is an important consideration! If you have shown it, you are responsible, in this sense, it is a positive action, as opposed to a less than stellar performance in the past. There are some credit bureaus that lenders use, and credit score, earned and reserved, is an important factor!
5. Past, present and future (foreseeable) income and employment / job security: Lenders examine your past and present income, and whether you are in gainful employment or self-employment, and the prospects for maintaining sufficient income are favorable. The more confident you are, the more likely you are to qualify for a mortgage.
Securing a mortgage, and the most favorable (with the best conditions), depends on many factors, as mentioned above. The better these are prepared and addressed, in advance, the easier and less stressful the process will be!