Mortgage Factors
- A borrower's credit history provides a good indication as to whether they'll fulfill their mortgage agreement and make on-time payments. Raising a credit score before applying for a mortgage helps applicants acquire a good interest rate and a credit approval. Aim for a score 680 or higher.
- Mortgage lenders do verify employment and income to ensure applicants are able to realistically afford a home loan. Proof of income may include tax returns (two years of tax returns if self-employed), paycheck stubs, retirement income or disability compensation.
- Debt ratio also plays a role in qualifying for a mortgage. Ideally, a borrower's monthly debt payments should not exceed 28 percent of their income. Calculate debt ratio by dividing monthly debts by monthly income.
- Borrowers ought to plan for a down payment when applying for a mortgage loan. Large down payments such as the traditional 20 percent down are not required by all lenders. Instead, borrowers can qualify for a home loan with as little as five percent down.
Consequences of a Bad Credit Score
Proof of Income and Employment
Lowering Debts
Downpayment Requirements
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