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Residential and Commercial Mortgage Solutions! |
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818 Rt. 202-206 North • Bridgewater, N.J. 08807 |
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The Mortgage Underwriting Process Financial institutions look at several pieces of information when you apply for a mortgage. Your housing affordability hinges on the amount of money you can come up with for the down payment and closing costs. The more you can come up with, the less you will have to borrow. Your gross income, job stability (at company or within occupation). Also your credit history and the ability to pay a mortgage, added to any existing debt, plays into the loan decision. For a conventional mortgage, you are reviewed based on two ratios, 28% & 36% of gross monthly income. High credit scores over 700 may enable fully documented applications higher debt to income ratios up to 50% of montnly gross income. Ratio #1: Your principal + interest + real estate taxes + insurance (PITI) should not exceed 28% of your gross monthly income. Example: principal & interest payment $1250 Monthly gross income $5500 Taxes 300 Homeowner insurance 50 PITI 1600 PITI / monthly gross income $1600/5500 = 29% Ratio #2: To the PITI payment, add existing monthly debt. Debts paid off within 10 months are generally excluded from the calculation. Your ratio to gross income should not exceed 36%. If your ratio exceeds 36%, don't panic, it doesn't necessarily mean you will not be approved, but it probably will reduce the amount of mortgage for which you can qualify. These parameters are for traditional loan programs. In fact, creativity plays a major role when it gets down to structuring the tough real estate. We have approved mortgage refinance customer with debt ratios up to 65%. . Get the credit you deserve One more thing you'll want to do at the outset of this process is to check the condition and accuracy of your credit report to prevent any "unwelcome" surprises. Your lender will definitely run your report during the prequalification process. The more you know and can tell them up front, the better. For a small fee, you can request your credit report from an agency such as Trans Union, Experian or CBI/Equifax. If your credit report is less than acceptable, a more recent track record of good credit management may help your case. Note: By law, the bad stuff must be dropped from your individual file after seven years. Bankruptcies and foreclosures stick around a little longer, though. Trans Union 800 888 4213 Experian 800 682 7654 CBI/Equifax 800 405 0081 Stretching your limits If you've just got to have more mortgage, there are a few things you can do to boost your borrowing power. 1) Reduce your long-term debt. Consider putting off the purchase of that new boat or accelerate your credit card payments to finish them off before you get into the loan approval process. 2) Increase your income. Wait for that annual raise. Or take on an opportunity to earn extra income. 3) Weigh your financing options. There are tons of loan programs out there. Try to find one that requires a lower down payment and lower monthly mortgage payments. Golden Mortgage can help you weigh your options. Apply now! CLICK HERE |
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Home | Home Purchase | Insurance Solutions | Apply On-line | Refinance Your Home | Special Offers |
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Telephone (908) 722-9217 • Fax (908) 722-2827 |
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