• Hillary C

Qualifying For A Mortgage: The Four C's


Are you renting and considering taking the leap to home ownership? Maybe you own a home already, but are outgrowing the space. No matter your position, the first step in determining if a new home purchase is right for you is to make sure you qualify for a mortgage. To do so, there are four main factors your lender will consider in determining your qualifying ability.

Capacity:

This is your current and future ability to repay the loan. This is primarily determined by examining your income, employment history and stability, and monthly debts. This information is used to then calculate your “Debt-to-Income Ratio” to determine your likeliness of being able to hold that mortgage payment.

Capital:

This would be your assets including checking, savings, investments including retirement accounts, other properties, and any other items you can sell for cash if needed. Your capital is used both for knowing how large of a down payment you are able to make, along with how much you will have in reserves after you close on your new home.

Collateral:

This is the value of the home that you are purchasing which is being secured by your new mortgage.

Credit:

This is your FICO credit score and report. Credit scores are used as a way of predicting future behavior. For example, higher credit scores imply a greater likelihood of you repaying your mortgage on time. Your credit score will help us determine which loan programs you are eligible for along with the associated pricing. The credit report is also used for determining your monthly debts as discussed above under “capacity”.

Now that you know what goes into a mortgage qualification, you may be wondering how much you personally can qualify for. This is where the pre-qualification process comes into play. I will go through each of these items so that we can determine what price point to narrow your search to.

Interested in how we calculate your purchasing power? Read more here!

#Prequalification #Qualifying #homepurchase #GettingStarted

HC

This website is for informational purposes only. The information contained herein can change at any time, and there is no representation to the accuracy contained herein. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. Please note that the pre-qualification does not constitute a commitment or a loan approval but is instead a preliminary assessment of your current credit worthiness. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Main Street Home Loans is not a Financial Advisor, Tax Consultant or Credit Repair Company. Please make sure to consult your own Financial Advisor, Tax Consultant or Credit Repair Company regarding your specific financial situation. Veterans Affairs loans require a funding fee, which is based on various loan characteristics. VA 580 FICO – Purchases only, must have Automatic Underwriting System (AUS) approval. No cash-out under 600. On a USDA Loan 100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included. On FHA loans, LTV’s of up to 96.5% for FHA loans. FHA 580 FICO – Credit score below 600 requires Automatic Underwriting System (AUS) approval. Fixed rate loans only. W2 transcript option not permitted. APR describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate. The APR allows a borrower to compare costs of credit because it factors in term, interest rate and fees associated with the loan. Adjustable rate mortgages (ARMs) are home loans with a rate that varies. Your interest rate and monthly principal and interest (P&I) payments will remain the same for a defined initial period, then adjust annually when that initial period is over. During the adjustable period, there will be an interest rate cap that sets a limit on how high your interest rate can go. This product is primarily for a borrower with good credit (min 680 FICO) but a low Loan-To-Value (95% max). Debt-to-income ratios apply. Investment condominiums not allowed. Refinancing an existing loan may result in the total finance charges being higher over the life of the loan. Down payment assistance programs may require an educational class be taken. Down payment assistance programs are typically second mortgages that require the borrower to apply for a first mortgage. Testimonials appearing on this advertisement and Zillow, Yelp, Facebook, Twitter or other social media outlets are individual experiences of those who have used our services. Main Street Home Loans. does not provide incentives for testimonials or reviews. Any customer reviews on or before February 5, 2019 are for services performed prior to employment with Main Street Home Loans. MLO licensing information: DC MLO143670; VA MLO-740VA; MD 5762. Main Street Home Loans is a Division of NFM, Inc. NMLS 2893. NFM, Inc. is licensed by: DC # MLB2893; Virginia Mortgage Lender and Broker, Licensed by the Virginia State Corporation Commission # MC-2357; MD # 5330. For NFM, Inc.’s full agency and state licensing information, please visit www.nfmlending.com/licensing. NFM, Inc.’s NMLS #2893 (www.nmlsconsumeraccess.org). NFM, Inc. is not affiliated with, or an agent or division of, a governmental agency or a depository institution. Copyright © 2019.

 

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