What are the main things I need to qualify for a mortgage loan?
They say there are five Cs of lending -- Capacity, Capital, Collateral, Credit and Character. This is the core of qualifying for a mortgage loan, and even though systems are automated, talk to a lender if you have a question.
Capacity. A creditor is interested in your income so that it can determine if you earn enough to pay your existing bills and a house payment for the loan you want.
Capital. A lender wants to know that you have a downpayment and can pay your share of the closing costs. You may be entitled to a special loan program where down payments are not required and closing costs are minimal.
Collateral. If you are unable to repay the loan, the collateral could ultimately be sold to retire the debt. In this instance the lender wants to know what the appraised value of the property is. Many borrowers who do not repay their debts also do not take care of their property. Equity would be needed here to act as your incentive to repay and not lose the property, and to cover basic repairs and sales costs if it does have to be sold.
Credit. Your lender wants to see what your credit report says about your history of repaying debts on timer, as much as how much credit is reported. Your credit score can also influence this. If you have credit problems, talk to your lender about it. There may be errors reported that you can have corrected. Many lenders have different programs and criteria that allow for some credit problems, even bankruptcy.
Character. Lenders want to see stabiity. This is in your earnings, your credit history, time on the job or at least in your field and in possible references and the way you have handled your finances in general.
Speak with a lender and always ask about special programs you may qualify for. There are many ways to borrow for a home or any other loan for that matter, but the ability to repay, the history that says you meet your responsibilities and adequate value of necessary collateral are the key elements.
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They say there are five Cs of lending -- Capacity, Capital, Collateral, Credit and Character. This is the core of qualifying for a mortgage loan, and even though systems are automated, talk to a lender if you have a question. 