Whether someone wants to take advantage of a mortgage, as part of the financing of a new home, or, decide, it makes sense to refinance their home, for a variety of reasons, including personal finance, getting a better interest rate, etc. important to begin the process, understanding some of the factors, which often become important considerations, of the qualification process. Since for most of us, our home represents our greatest financial asset, it doesn’t make sense to take the time and effort to understand how best to take advantage of this objective. With that in mind, this article will briefly consider, examine, assess and discuss 5 factors that can affect someone’s eligibility for these loans.
1. Total Debt: Credit institutions take many factors into account, and one of the most important 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. If one decides to proceed, research this first and try to pay off the total debt!
2. Debt/Earnings Ratio: There are only 2 ways to lower this ratio/percentage. One is to increase one’s income/income, and the other is to reduce debt. For most of us, the second approach is the one that’s easier to tackle, in a controlled, timely manner!
3. Housing debt/earnings ratio: There are two ratios, credit institutions, almost always, consider and investigate, thoroughly. These ratios are not considered recommendations, but are generally fixed/strict limits! Besides being a necessity to get a mortgage, one should seriously realize, if this is too high how could anyone be comfortable with the monthly load bearing burdens of owning a house!
4. credit rating; pay off debt: How you have handled past and/or existing debt is an important consideration! If you have demonstrated you are accountable, in this regard it is a positive action as opposed to a less than great performance in the past! There are a few credit bureaus that lenders use, and the credit one earns and reserves is an important factor!
5. Earned, current and future (foreseeable) income, and employment/job security: Lenders examine your past and current earnings, whether you are employed, or self-employed, and the prospects of maintaining adequate earnings are favorable! The more confident you make them, the more likely you are to qualify for a mortgage.
Securing a mortgage, and the most favorable (with the best terms), depends on many factors, as mentioned above. The better prepared and handled, the easier and least stressful the process is!
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