Judge your loan eligibility on your own
Are you a right candidate for a mortgage loan? This is indeed a very pertinent as far as the ownership of a home is concerned. In fact, you can judge your candidature on your own by taking into consideration some basic factors. Here we discuss about these factors, which will help you judge our credentials on your own.
Mortgage affordability
When you take out a mortgage loan, the most important thing that you need to consider is whether or not you can repay it. You need to ensure that out of the excitement to own a home, you do not overbuy. Over buying can indeed be very disastrous as you may have to face huge difficulty in repaying the loan. So, make sure that you take out a loan which you can repay on time.
Credit score
Another key element in determining your eligibility to get approved for a mortgage loan is of course your credit score. With poor credit score, you may not be eligible for a mortgage loan at all. Sometimes, though you may be eligible for a mortgage loan but not at favorable terms. If your score is above 700, then you are a good candidate for a mortgage loan, even the traditional ones. For an FHA loan, the minimum credit score required is 600 to 620. In order to augment your chances to get approved for a mortgage loan, you need to focus on your credit score very seriously. Here, you need to remember that late payments, delays, and pathetic credit history affect your score negatively. You need to put in serious effort to improve your score.
Down payment
Another key element which is seriously considered while approving you a loan is the down payment amount that you are willing to pay. For conventional loans, the down payment amount is generally 10% of the purchase price of the house. For an FHA loan, the down payment amount is 3.5% of the purchase price of the loan. If you are not able to pay the required down payment amount, you may be disapproved for the loan. In case you are approved for the mortgage loan, then you have to pay the private mortgage insurance. This serves as a cushion against the defaulting borrowers.
Loan options
You have to be well aware of the different types of loan options available at the market place. You need to think what type of loan – FHA loan, VA loan, conventional loan etc meets your requirement best. If you are senior citizen, you should also go through the reverse mortgage information and check whether or not you are good candidate for a reverse mortgage loan.
Continued employment status
One important thing that the lenders look for is your records of continuous employment of at least 2 years. If you are an employed person, it is not much difficult to get the documents of your employment records. However, if you are a self-employed person, then you have to show tax returns of past two years. If you can arrange these documents, it does not become very difficult to obtain the mortgage loan, provided that you have met all other eligibility criteria.
It is to be noted that there are no hard and fast rules for determining your approval of a loan. The final decision to offer you the loan rests upon the lender.
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About the Author: Jessica Bennet with her vast experience in the mortgage industry has been associated with the MortgageFit Community as a Mentor. Not only does she participate in the community forums to give her suggestions, but also makes her contributions through different articles on mortgage.
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