Mortgages require numerous evaluations. This is because they involve large amounts of funds and therefore the buyer needs to be convinced of the readiness of the borrower to cater for the costs and repayment procedures. There are several requirements to getting qualified for mortgage.
The process of assessing a loan request from a borrower in terms of potential profitability and risk is known as underwriting. A loan officer or an underwriter performs this task at a financial institution. The underwriter analyzes the information indicated in loan application form and from the appraisal of the property at hand.
In terms of the income the factors considered by the lender are place of employment, wages or salary and whether the employment is likely to continue into the future. This information helps determine the long term ability of mortgagee to pay. Other income option that would be considered are part-time income, income from a working spouse, dividends and interest, rentals, self-employment, royalties, commissions and bonuses, retirement annuity among other incomes.
Possession of assets places the borrower at a great advantage. These assets have to be verified in order to establish if they are adequate to cater for costs and a down payment on the mortgage. The loan officers check the deposits of an applicant which enable to establish ability to save which is evidenced by a savings account, ownership of securities, real estate and other properties.
The other considered factor is the credit history such as past payments on loans, debts and other obligations. Any fraudulent or slow payments of these previous obligations usually affect the suitability of a borrower to get a loan unless they are justified otherwise. Lenders may however consider the applicant if the interruption in payment was due to factors such as loss of income.
Persons with established households need to account for their housing expenses. The viewed expenses are taxes, the loan repayment principle and interest and any insurance payments made. These costs are then calculated and compared with the total monthly or annual income. If the loan to income ratio is high then the application could be denied.
The chances of getting qualified for mortgage are also affected by any other obligations that divert the usage of income. These include car loans, child support expenses, and credit card accounts among others. Cases of bankruptcy and outstanding debts can lead to rejection of an application. Lenders will also consider factors that can increase the chances of a borrower. These are known as compensating factors. They are composed of liquid assets, possession of high demand skills and equity down payment on property.
The process of assessing a loan request from a borrower in terms of potential profitability and risk is known as underwriting. A loan officer or an underwriter performs this task at a financial institution. The underwriter analyzes the information indicated in loan application form and from the appraisal of the property at hand.
In terms of the income the factors considered by the lender are place of employment, wages or salary and whether the employment is likely to continue into the future. This information helps determine the long term ability of mortgagee to pay. Other income option that would be considered are part-time income, income from a working spouse, dividends and interest, rentals, self-employment, royalties, commissions and bonuses, retirement annuity among other incomes.
Possession of assets places the borrower at a great advantage. These assets have to be verified in order to establish if they are adequate to cater for costs and a down payment on the mortgage. The loan officers check the deposits of an applicant which enable to establish ability to save which is evidenced by a savings account, ownership of securities, real estate and other properties.
The other considered factor is the credit history such as past payments on loans, debts and other obligations. Any fraudulent or slow payments of these previous obligations usually affect the suitability of a borrower to get a loan unless they are justified otherwise. Lenders may however consider the applicant if the interruption in payment was due to factors such as loss of income.
Persons with established households need to account for their housing expenses. The viewed expenses are taxes, the loan repayment principle and interest and any insurance payments made. These costs are then calculated and compared with the total monthly or annual income. If the loan to income ratio is high then the application could be denied.
The chances of getting qualified for mortgage are also affected by any other obligations that divert the usage of income. These include car loans, child support expenses, and credit card accounts among others. Cases of bankruptcy and outstanding debts can lead to rejection of an application. Lenders will also consider factors that can increase the chances of a borrower. These are known as compensating factors. They are composed of liquid assets, possession of high demand skills and equity down payment on property.
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Determining the right personal loan for your requirements can be quite a difficult task considering all the options out there. For this reason we at Mountaintop Financial focus on providing you the info you need to make a smart choice.
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