Archive for the ‘Mortgage’ Category
Tips to Successfully Obtain a Mortgage Loan
Many borrowers today are frustrated about the fact that they can’t obtain a mortgage loan. The application process has become tougher and many people including those with good credit scores have been declined for loans. Reports from the Federal Financial Institutions Examination Council revealed that one in four mortgage applicants were rejected in 2010. The figure is up by 18 percent from the number of people denied mortgages in 2003.
But government officials clarified that lenders have money to loan to people. It’s just that their standards have become stiffer. As such, it should be the responsibility of borrowers to know the criteria required in order to successfully obtain a mortgage particularly those supported by the government-run mortgage lenders, Fannie Mae and Freddie Mac.
Lenders today are particular about the applicant’s ability to provide the 20 percent down payment. This is in addition to the closing costs.
Another important factor is a good credit score. The minimum credit score borrowers need to meet is 620. So make sure you get copies of your credit report to find out your history. And should there be errors or problems, do take action to correct them right away.
The applicant’s income is also very important. This will show your financial capability in making your payments moving forward. Keep in mind, however, that only up to 28 percent of your income should be allocated for the housing costs. Having a steady income then should give you a good chance of getting a mortgage for that home you want to buy for your family.
Lending institutions also look for a loan-to-value ratio of 80 percent. This means, they prefer a home value that is greater than the mortgage balance. The reason behind this is that in the event the borrower defaults from his payments, the bank will be able to sell the residential property and recover the loss.
These four criteria are best followed if you’re obtaining a loan backed by Fannie Mae or Freddie Mac. If, however, you can’t meet these criteria, don’t lose hope because you can always approach the Federal Housing Administration (FHA).
FHA-insured loans are not that hard to obtain. The agency’s standards are flexible so getting a mortgage is easier. The minimum credit score borrowers have to meet is 580 to qualify for a loan that requires a 3.5 percent down payment. A credit score of 500 is enough to qualify for a loan requiring a 10 percent down payment.
The FHA also explained that they can accommodate borrowers even with negative issues in their credit score. What matters is for the most part, the borrower is able to provide proof of a stable income and the ability to correct those past mistakes that tainted their credit history.
On the whole, obtaining a mortgage loan is still possible as long as borrowers take the extra effort to follow the standards and maintain a stable financial status moving forward. Having the right attitude towards your financial obligations is really essential these days.