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

William Chesney asked:




With a view to lend a helping hand to those people having problems with mortgage repayments, Obama’s government has come up with special home refinance and loan modification programs. These programs mainly aim at helping the destitute. Due to recession and other economical crunches, many home loan borrowers are unable to repay their mortgage loans promptly. In such a scenario, this special package offered by the government provides relief to about 9 million struggling mortgages.

This package includes two main key components:

Home Refinancing Loan modification

Let us look at each of these components in detail:

Home Refinancing: allows two major players Fannie Mae and Freddie Mac to refinance all those borrowers whose balance outstanding is more than the true value of the property. However, borrowers need to fulfil a clause to be eligible for this program. The mortgage loan procured by them should be guaranteed by these agencies. On the other hand if you have the financial ability to pay the excess amount due, you would be entitled for this option.

But this program is only applicable to those properties that are being used for residential purpose. Any unoccupied property would not get qualified under this program.

Loan Modification: In order to encourage and promote this program on a large scale, Obama government has announced special incentives to lenders modifying loans. The main aim of this program is to help homeowners avoid foreclosures.

How does home loan modification work? Loan modification cuts down the rate of interest up to 2% on the existing loan, increase the repayment period which would in turn reduce the monthly EMI to be paid towards this loan. And most importantly all the penal charges and late fee are waived off.

Mortgage modification also allows lenders to have control over the total payments made by the borrower. In no case, the lender would be able to increase the liabilities of borrower more than 31%.

Yolanda

chck asked:


For example: Home loan borrowers may not be required to show their ability to repay the loan, their credit history may be poor and they may not have to prove they have sufficient income to repay the mortgage loan.

CLAYTON