It has been discussed at great lengths that the current real estate market is a buyers market. However, we also know that we have experienced the mother of all credit contractions in the recent past. While there are a plethora of purchase options open to qualified buyers, the questions remains how many of us are actually going to qualify for that much needed finance in order to be able to close that home deal. Prior to even considering the purchase of a home loan it is absolutely necessary that you check whether you qualify for a loan to begin with. Getting yourself a pre-approved loan or checking your pre-qualification status can go a long way to save you heartache and disappointment in the future. When looking at whether you qualify for a loan it is important to under stand what your home loan officer is looking for. Listed below are some things that you can be rest assured would be a focal point during a pre-qualification process.
Willingness To Pay
If we were to describe this in a couple of words, they would be “credit score”. As credit contracts lenders lay a lot of emphasis on your credit score. You willingness to repay is rather evident from your credit score. Lenders usually demand “A” rated credit scores. These are credit scores, which are 620 and higher. In certain cases if your credit score is exceptional, for instance if you have a credit of 700 plus, in such circumstances you may not even need to produce half the documentation that would normally be required.
Positives On Your FICO Score
Listed below are some of the points that reflect positively on your credit score and consequently ease the pre-qualification process:
· One major plus is not having any repayments, which are older than 30 days in the span of the last 12 months on your credit report.
· If you have credit cards and/or lines of credit and have only used a part of it, while the other remains untouched, this too adds points to your credit score and would also impress the assessing officer.
· Another major point booster is having debt obligations/loans paid off either on time or early.
· In addition to the above if you have been paying down your credit cads or line of credit in full each month, this too looks very impressive during the qualification process.
Negatives On Your FICO Score
Here are a few things that would really prove to be a setback to your FICO score.
· Late payments during the last 30 days.
· Loans, which have a charge off, listed next to them.
· If you have been maxing out your credit cads or lines of credit, be rest assured that it has lessened your credit score.
· Not having a credit file. If you feel that you are uncomfortable with borrowing and as a result of that you do not have a credit card and no record of a credit, history, you would have taken away any information for your credit officer to base a decision on. It is vital to have a credit file.
Capacity
If there are ticks against all the above, the last thing your lender is going to check is your ability to make the repayments on your home. This would include checking your payslips and if you are self-employed your tax returns. You need to clearly exhibit the capacity to make the repayments on your home loan while being able to lead a normal life.
These are some of the things that your lender will check to make sure that you qualify for a loan.
It has been discussed at great lengths that the current real estate market is a buyers market. However, we also know that we have experienced the mother of all credit contractions in the recent past. While there are a plethora of purchase options open to qualified buyers, the questions remains how many of us are actually going to qualify for that much needed home finance in order to be able to close that home deal. Prior to even considering the purchase of a home loan it is absolutely necessary that you choose the right mortgage loan and check whether you qualify for a loan to begin with. Getting yourself a pre-approved loan or checking your pre-qualification status can go a long way to save you heartache and disappointment in the future. When looking at whether you qualify for a loan it is important to under stand what your home loan officer is looking for. Listed below are some things that you can be rest assured would be a focal point during a pre-qualification process.
