Jared Lee asked:




Several types of mortgage loans are being floated in the market by multiple financial institutions. However, it is advisable to have information regarding various criteria that are taken into consideration by mortgage lending firms while determining the eligibility of a borrower for a mortgage home loan. As these criteria determine the interest rate on the loan, knowledge about them is even more vital.

The most important criterion that lenders usually go for is about the repayment capability of the borrower. Credit history and FICO scores of the borrower provide ample information regarding financial status and the repayment history of the borrower. Lenders usually give prime importance to borrowers having a reasonable credit history with credit scores of more than 600. Credit reports of the borrower can be obtained from any of the three leading credit bureaus in the U.S.. Credit reports contain details such as the income of the borrower, his credits, and any late payments made towards rent, mortgages and credit card bills.

Another important criterion is the debt-to-income ratio of the borrower that determines the eligibility and interest rate on the loan. Borrowers having a debt-to-income ratio of 28/36 are considered ideal for a mortgage loan. However, certain lenders entertain customers with a poor debt-to-income ratio. But, loans to these customers are provided at a higher interest rate and require a high down payment.

Apart from these, the customer is expected to have a steady income and a satisfactory employment record so as to multiply his chances of getting a mortgage loan approved. The customer must be employed with a single employer for a minimum period of 2 years in order to be eligible for a loan.

Interest rates on the loan also vary if the loans are federally insured or assured by any private mortgage insurance companies.

Mary

Jessie Anderson asked:




Anyone who is interested in getting a mortgage will need to take certain steps to ensure that they get their loan application approved. Due to the recent housing mess, there are a lot of lenders who have changed some of their criteria for loans. No longer is it possible to get a mortgage home loan approved if you don’t have good credit or a down payment.

There are certain things that lenders look for when they approve mortgage loans. Borrowers need to understand that a mortgage loan is one of the most important decisions that they will ever make in their financial life. It is important that you find the right lender when you are getting a mortgage to ensure that you get a loan application approved.

People who are interested in getting mortgages approved need to ensure that they have a down payment for the loan. If you can save up for a down payment it will ensure that you can get your application approved. Down payments significantly reduce the amount of risk that borrowers face when they approve the loan applications. They will also give you lower monthly payments on your loan.

Once you have saved up money for a down payment it is important that you find the right mortgage broker for your loan. A broker will be able to work with you and find a mortgage loan that works for your financial needs. They will tell you how much money that you can get approval for and what down payment you will need for the loan. A good broker is essential for anyone who is looking to get a mortgage home loan approved.

Darlene

Carrie Reeder asked:




Being self employed has many benefits. When you are self-employed, you can write off all of your deductions on your taxes. You have the potential to make more income than someone who is employed by someone else. You have the freedom to be your own boss. One of the few times when being self employed has some drawbacks is when you go to get financing for a home or a major purchase. But, here are some things to know that can help you make the mortgage loan process run smoothly when you are self employed.

When verifying income – In general, lenders want to see at least 2 years of self employment history, sometimes they want to see 3 years. They will want to see this history verified in tax returns, usually. Sometimes the lenders will figure your income as being the average income you claimed on your income taxes as profit, not your gross business income. Sometimes the lender will figure your income as the lowest of the two years and sometimes as the highest of the two years. Talk to your mortgage broker or lender and find out which way they verify. Sometimes lenders will figure a portion of your write-offs or deductions back into your income. There are ideas of other ways that a lender may be able to verify your income and if you are self employed it will help you to be able to show a more of your income.

A. Use bank statements as proof of income – Find a lender who will accept 1-2 years of bank statements as proof of income. It is becoming more common nowadays for lenders to verify your income this way. This way usually works better in proving income than going off of your tax returns, because you can usually prove a lot more cash flow than tax returns will show. On your tax returns you usually subtract each and every business expense before you claim any profit. When using bank statements, you are still proving income, this does not put as much emphasis on your credit score or down payment as the stated income or no doc loan will.

B. Do a stated income or no doc loan – These types of loans are done all of the time, where you need no proof of income, you only state on a form what your income is, and you do not need to verify it. This can help if you are self employed and want to state your income as it is and not worry about having the lender average out your income from the last two years instead. Make sure you are accurate in stating your income, because the lender may be able to obtain past taxes from the IRS to confirm it. When you do a stated income loan, this will put more emphasis on your down payment or credit score. So, you will usually need one of these factors to be strong if you want to go this route. Most of the time when you do a stated income or no doc loan, you will be charged a slightly higher interest rate because of the extra risk the lenders carries.

C. Put together a profit & loss statement stating accurately stating your profits and expenses from the last two years. This can be a time consuming project, but it can sometimes be used as income verification for a lender. It is more usable if you have had it signed or verified by your accountant.

There are many ways that lenders can work with you if you are self employed. There are many programs available to help you and if you have a down payment or decent credit, you are almost guaranteed to be able to get approved somewhere. To see our list of recommended lenders that would be able to help you, visit here: Recommended
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Katherine