Find out how much you can borrow
The first step in obtaining
a loan is to determine how much money you can borrow.
In case of buying a home, you should determine how much
home you can afford even before you begin looking. By
answering a few simple questions, we will calculate
your buying power, based on standard lender guidelines.
Click here to Pre-Qualify.
You may also elect to get pre-approved
for a loan which requires verification of your income,
credit, assets and liabilities. It is recommended
that you get pre-approved before you start looking for
your new house so you:
- Look for properties within
your range.
- Be in a better position when
negotiating with the seller (seller knows your loan
is already approved).
- Close your loan quicker
More on Pre-Qualification
LTV and Debt-to-Income Ratios
FICO Credit Score
Self Employed Borrower
Source of down payment
LTV and
Debt-to-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of
exposure that a lender is willing to accept in financing
your purchase. Lenders are usually prepared to lend
a higher percentage of the value, even up to 100%, to
creditworthy borrowers. Another consideration in approving
the maximum amount of loan for a particular borrower
is the ratio of monthly debt payments (such as auto
and personal loans) to income. Rule of thumb states
that your monthly mortgage payments should not exceed
1/3 of your gross monthly income. Therefore, borrowers
with high debt-to-income ratio need to pay a higher
down payment in order to qualify for a lower LTV ratio.
FICO Credit
Score
FICO Credit Scores are widely used by almost all types
of lenders in their credit decision. It is a quantified
measure of creditworthiness of an individual, which
is derived from mathematical models developed by Fair
Isaac and Company in San Rafael, California. FICO scores
reflect credit risk of the individual in comparison
with that of general population. It is based on a number
of factors including past payment history, total amount
of borrowing, length of credit history, search for new
credit, and type of credit established. When you begin
shopping around for a new credit card or a loan, every
time a lender runs your credit report it adversely effects
your credit score. It is, therefore, advisable that
you authorize the lender/broker to run your credit report
only after you have chosen to apply for a loan through
them.
Self
Employed Borrowers
Self-employed individuals often find that there are
greater hurdles to borrowing for them than an employed
person. For many conventional lenders the problem with
lending to the self-employed is documenting an applicant's
income. Applicants with jobs can provide lenders with
pay stubs, and lenders can verify the information through
their employer. In the absence of such verifiable employment
records, lenders rely on income tax returns, which they
typically require for 2 years.
Source
of Down Payment
Lenders expect borrowers to come up with sufficient
cash for the down payment and other fees payable by
the borrower at the time of funding the loan. It is
generally expected that these funds be borrower's own
saving, although a borrower may receive non-returnable
gifts towards down payment and other loan fees.
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