What Is A Credit Score?
When lenders evaluate a loan application, a process called underwriting, they try to evaluate your ability and willingness to repay the loan. They judge the borrower’s ability to repay by reviewing the income and stability of past earnings. This practice helps the lender to determine if the borrower can afford the loan payments. The review of past credit history is used to judge the willingness of the borrower to repay the loan.
Lenders want their evaluation to be as accurate, objective and consistent as possible. To help achieve this goal, home mortgage lenders use credit scores to assist in the underwriting process. Credit scores are numerical values that rank individuals according to their credit history at a given point in time. A credit score is based on past payment history, the amount of available credit, and other factors. According to Fannie Mae and Freddie Mac, two large investors in mortgage loans, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan.
Credit scores are just one of many factors considered in the underwriting process. The lender will review the many components that make up the financial situation of a borrower. Even when a credit score is low, there are other factors that could overcome the negative credit issues and satisfy other underwriting criteria.
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estate questions and needs.
Stacy Schnell – Realtor Associate – Cell : 856-364-0772
Though you may be willing to spend a certain amount, the real determination of how much house you can afford is driven by how much a lender calculates you can afford. So before you begin to search for the perfect house, it is very important to begin the homebuying process by getting preapproved. Getting preapproved for a home mortgage loan will provide you with a preliminary statement on the size of loan for which you can qualify. Knowing this, you can then focus your home search.
In general, lenders allow your total monthly housing costs to go as high as but not more than 30 percent of your gross monthly income. The second requirement is that not more than 36 percent of your gross monthly income can be tied up in the total monthly house payment and payments on long-term debt.
Visit my Website to read more and for adiitional information about obtaining a mortgage. Please feel free to give a call anytime for assistance with the home buying process!
Stacy Schnell – Realtor Associate – Cell: 856-364-0772
Qualifying for a Federal Housing Administration (FHA) loan can be much easier compared with a conventional one. Borrowers will need a valid Social Security number, and be a lawful resident of legal age to be able to sign an FHA loan. Qualifying for a loan requires a minimum credit score of 500 in addition to a FHA-approved property appraisal and a favorable debt-to-income ratio.
This excerpt from Valuepenguin.com Click HERE to read more.
Visit my website stacyschnell.com for more helpful information on getting prepared to purchase a home or call me anytime, Id be happy to assist!
Stacy Schnell – Realtor Associate Cell: 856-364-0772
The down payment. Cue the dramatic, fear-filled suspense music. Yeah, it’s scary. Coming up with enough cash to put down when buying a house is the single biggest roadblock for most hopeful home buyers. But how much do you really need?
What is a down payment?
A down payment is the cash you pay upfront to get a home loan. It is deducted from the total amount of your mortgage and represents the beginning equity — your ownership stake — in a house and property.
This excerpt from Nerdwallet.com CLICK HERE to read more.
- Keep balances low on credit cards and other “revolving credit”. …
- Pay off debt rather than moving it around. …
- Don’t close unused credit cards as a short-term strategy to raise your scores.
- Don’t open a number of new credit cards that you don’t need, just to increase your available credit.
If time is a factor, here are four ways to improve a credit score in 30 days:
- Correct any errors on the credit report. …
- Become an authorized user. …
- Raise your available credit. …
- Negotiate. …
- 1. Make minimum payments on time. …
- Reduce debt-to-income ratio. …
- Have a good mix of debt.
Call today for more information on how to get yourself prepared to purchase a