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Government helping homeowners
refinance
Those with little equity and less
than stellar credit may be able to
work with the FHA or VA to refi their
homes.
Qualify today for 30 or 15 year fix
3,5,7 or 10 year ARM
Rates as low as 4.125%
Compare local mortgage rates
Find best rates in your area for
mortgages for home purchase or
refinancing.
Call 1-800-928-6154 or apply online
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Your Credit Report?
Did you know that 75% of all mortgage lenders use
a three-digit credit score to determine your loan
eligibility? This score is based on the information
contained in your credit report. And the interest
rate you will be charged is based on your credit
score, so raising your credit score as little as 15
points could result in a lower interest rate and
thousands in savings. You can save anywhere
from a few hundred dollars in credit card interest
charges, thousands of dollars on your next car
loan, and tens of thousands of dollars on a
mortgage loan simply by improving your credit
score as much as possible.
The information below offers general guidelines as
to what your credit score might be. Each lender
sets its own guidelines for approving loans and
issuing credit. For this reason, the information
below offers only general guidelines. Your debt-to-
income ratio also plays a role in determining
whether or not you will be issued credit. Some
lenders require a debt-to-income ratio that may be
higher or lower than those stated below. See
bottom of this page to find out how to calculate
your debt-to-income ratio.
The information below is based on the FICO
scoring model which ranges from about 375 to
900. Other lenders might use their own in-house
scoring systems or another scoring model.
General rules to determine your credit score and
credit worthiness are as follows:
A rating [Credit score 660 or higher] -- You can
easily obtain financing at the best rate; you can get
approved for a credit card online in a few seconds.
Note that a score above 700 means you have
extremely good credit.
Typical debt- to- income ratio: Below 35%
Mortgage: You have not been late with a payment
in the last 24 months
Installment loan: You have been 30 days late
making payments 0 or 1 time within the last 12 to
24 months
Revolving credit: You have been 30 or 60 days late
with a payment 0 or 1 time in the last 12 to 24
months
Additional requirements: Good/excellent credit
during the last 2 to 5 years; no bankruptcy within
the last 2 to 10 years
B rating [Minimum credit score 620] You can get
approved, but not at lowest rate. You can get credit
cards and such, but at a higher rate than someone
with an A rating.
Typical debt-to-income ratio: Around 50%
Mortgage: You have been 30 days late with a
payment 2 or 3 times in the last 12 months
Installment Loan: You have been 30 days late with
a payment 2 to 4 times during the last 12 months
Revolving credit: You have been 30 days late with a
payment 0 to 2 times in the last 12 months
Additional requirements: You have no 60-day late
mortgage payments; if filed bankruptcy, it must be
discharged 2 to 4 years ago
C rating [Minimum credit score 580] Have trouble
getting approved. Very high rates. The lender
might ask you to get someone to co-sign for you.
Typical debt-to-income ratio: 55% or higher
Mortgage: You have been 30 days late with a
payment 3 or 4 times in the last 12 months
Installment Loan: You have been 30 days late with
a payment 4 to 6 times during the last 12 months
Revolving credit: You have been 60 days late with a
payment 2 to 4 times in the last 12 months
Additional requirements: If you filed bankruptcy, it
was discharged 1 or 2 years ago
D rating [Minimum credit score 550] Serious
trouble getting approved. Co-signor required.
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Pre-Qualified vs. Pre-Approved
While shopping for a home loan, brokers and
lenders will offer to pre-qualify or pre- approve you
for a mortgage. Home loan pre-qualification and
pre-approval are different and distinct processes,
so it is important for you to understand the
difference.
Pre-Qualified
A loan officer or loan processor working for a
mortgage lender or broker can typically pre-qualify
you for a home loan within an hour. Getting pre-
qualified for a home loan is a good first step that
will let you know if you should proceed to the pre-
approval process. To get pre-qualified you will
need to complete a mortgage application and
allow the broker or lender to pull your credit. They
will review the mortgage application and your
credit and let your know if you are pre-qualified.
Pre-Approved
Only a mortgage underwriter can pre-approve you
for a home loan, loan officers and processors can
not. Typically mortgage brokers do not have
underwriters on staff, so they typically can not pre-
approve your home loan. A valid pre-approval is
the best tool you can have when shopping for a
new home. The key is to ensure that it is valid. A
valid pre-approval has been underwritten by an
authorized underwriter (an underwriter is the final
person that says your loan is approved). If an
underwriter pre-approves your home loan
application upfront, all you have to do is find the
home you want, have it appraised, and then you
should be able to close in just a few days. Some
mortgage brokers and lenders will issue pre-
approvals that have not been reviewed by an
authorized underwriter, be sure to ask.
To get pre-approved for a home loan you will need
to provide the underwriter with your income and
asset documentation (W2’s, Bank Statements,
etc). The underwriter will review your credit,
mortgage application, documentation, and then
approve you for a set loan amount and property
value. Once you have been pre-approved for a
home loan you are ready to start shopping. The
process typically takes a couple of days.
Knowing exactly what type of home loan you can
obtain will allow you to shop and negotiate with
confidence. For example, you could inform a seller
that you are pre- approved for the mortgage and
you are prepared to close next week. If the seller
needs to close quickly, it will not matter if there is
another buyer that cannot close for weeks or
months. Plus, sellers do not like to take their
properties off of the market for long periods of
time. The ability to close quickly is one way to get a
great deal.
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Two Key Factors in
Qualifying for a Home Loan
The two key factors lenders use to
determine whether to loan you
money are your ability and your
willingness to repay the loan. The
ability is measured by your income
and assets while your willingness is
measured by your credit history
When a lender makes a decision
about a mortgage application, they
consider two basic factors: 1) your
ability and 2) your willingness to
repay the loan.
Ability to repay the mortgage is
determined by verifying your current
employment and analyzing your total
income. Lenders prefer for you to
have been employed at the same
place for at least two years, or at
least be in the same line of work for a
few years. Your proposed monthly
payment will be compared to your
monthly income and debt.
Willingness to repay is influenced by
how you have paid previous loans
and by examining how the property
will be used. Willingness can be
gauged by your > credit report and
previous commitments to pay rent
and/or utility bills. There is also a
greater tendency to stick with your
payments if you live in a house as
opposed to a rental property or
vacation home.
It is important to remember that
there are no set rules and each
applicant is handled on a
case-by-case basis. Many applicants
come up a little short in one area but
make up for it with other strong
points. These compensating factors
may include a large down payment
solid employment extensive
educational background or overall
financial health.
For applicants who need to make a
lower down payment mortgage
insurance is protection for the lender
in case you stop making payments.
This allows low and moderate
income families to become
homeowners with low down payment
programs.
What's the value of the home you want?
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for how much.
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Get free instant home values. See millions of
homes for sale. See what sold recently -- and
for how much.
Visit ValueFinder
| Credit Repair Services Join millions of people who are repositioning themselves to enjoy financial freedom. Repair your credit today! Then learn how to manage the new buying power you have earned so you'll never, ever experience bad credit again. Enjoy the following deletions Tax Liens Judgments Repos Foreclosures Evictions Charge Offs Medical Bills Late Payments Student Loans Bankruptcy Benefits New Home New Car Low Interest Rates Unsecured Credit Cards Family Vacations Lower Insurance Rates Living Debt Free How it works There are three major national credit reporting agencies, who are for profit, multi-million dollar national credit corporations that gather and sell your private personal credit information |
