Anyone planning to sell their current home and move to a new community, should know that the process to get an approved mortgage can be a fairly challenging event. This process applies to the great homes listed in Cranberry Township as well. It is important to start out with a solid understanding of the mortgage approval process and equally important to find an experienced mortgage broker. There are a number of key factors that go into home loan approval. Here’s a good summary of everything you will need.
The Process Overview
The mortgage approval process requires a vast amount of data, from past tax returns to current income statements, and that’s just the start of an enormous pile of paperwork to get pre-qualified for a loan. It is a complicated process, since lenders always seem to want more when it comes to information that lowers the risk picture. The Best Mortgage Broker in Cranberry Township, Matt Arbutina, can guide you through the process and make sure the best options are available to you.
After all the basic paperwork is packaged by UMA Inc, mortgage broker in Cranberry Township, lenders will then dig in to your credit score, compute a debt-to-income ratio, and take a detailed look at employment history. This can result in a hectic experience, and add a fair amount of stress to your already busy life. It is a challenging process, but the one most people understand is a process worth the effort, given the long-term benefits of home ownership. For a home loan in Cranberry Township, United Mortgage Associates, can ease this challenge.
Factor Number 1: Your Credit Record
A mortgage is a loan for property. Your credit report is an important factor for that home you would like to purchase in Cranberry Township. A mortgage broker that has great local knowledge and an understanding of the components of a credit report can help you with this important purchase. Your credit score is key in evaluating your ability to meet the monthly mortgage payments. It is a significant loan amount, and therefore, your credit score can have a significant impact on your options. With a poor rating, if approved, you can expect higher interest rates, and/or higher mortgage insurance premiums. Your credit score is critical in the process and regardless of your score: (poor, fair or excellent), you need to work with an experienced mortgage broker to obtain the best possible terms.
Factor Number 2: Debt to Income Ratio
The second factor is your current debt level in relation to your income This means the total amount of all those credit cards and other debt obligations you may have accumulated over the years, divided by your gross income. This ratio of debt to income, is often referred to as (DTI). This is an important financial ratio used for business evaluation and used for potential home loans as well. For your home loan evaluation, the total debt obligations would exclude rent or existing mortgage, unless you plan to keep your existing home as well as a new home in Cranberry Township. Every basic financial advice you have ever heard starts with staying away from credit card debt, and that can be a challenge for many, but it is essential for the best home loan terms to strive for a low DTI. To help with understanding the DTI ratio, let’s look at
A simple numeric example of the calculation. Let’s assume your monthly debt obligations are $2,500 a month, and you have a monthly gross salary of $5,000 your DTI is 50%. A debt to income ratio of 50% gives many lenders risk concerns . Lenders would want a DTI in the 36-40% range. However, a knowledgeable mortgage broker can help you find good options in with DTI as high as 45%, after taking into account other credit considerations.
Factor Number 3: The Down Payment
Another very important factor is how much of a down payment you can put down on that great home in Cranberry Township. Your mortgage broker can help with all the options, but will generally advise the highest down payment possible. Obviously, easier said than done, but a higher down payment decreases the risk for the lender and increases your loan payment options. If you can make a down payment in the ideal 20% range, you will not only find far better loan terms, but you will pay a significantly lower interest amount over the life of the loan. A reduction of just a few interest points can make a huge difference in the amount paid over a thirty-year loan. When you work with an experienced mortgage broker, you can still expect to get approved for down payments in the 5-7% range, but more is always better, when it comes to the down payment. One of the key reasons of working with a knowledgeable mortgage broker is to package your financial profile with the best down payment you can manage and get the best loan possible. An experienced mortgage broker will also inform you that a larger down payment brings the advantage of greater home equity, along with a lower monthly mortgage payment. Lastly, you will need down payments of 3-5 for conventional loans and zero (0) for VA (veteran home loan guarantee) and USDA (insured) loan products.
Factor Number 4: Your Job History
A very important factor is your income and employment history, job history and income stability are significant indicators of the ability to make the payments over time. Stability in your earnings means a lower risk of financial issues that may impact loan payments. This is in an important are to work with your mortgage broker to demonstrate your complete personal financial situation amounts to a low risk for loan default. Along with your job history, your credit score, and DTI provide and risk profile that can be improved with down payment size. Job history requirements usually means pay stubs for at least two years, ideally with the same employer. This view of your financial condition is prepared with the help of your experienced mortgage broker to demonstrate that you can repay your Cranberry Township home loan.
Factor Number 5: Work with the Best Mortgage Broker in Cranberry Township
In summary, all the mortgage factors described above are very inter-related. Your job history and income, are inter-woven with your debt level, credit rating and available savings for down payment. But everyone’s financial situation varies and lenders will often take the most risk averse stance. You need an experienced mortgage broker like Matt Arbutina to put it all together for you.
A broker that can assemble a financial package that lets lenders know you deserve great loan terms and at interest rates that will save you thousands over the years.
United Mortgage Associates truly knows their way around Cranberry Township and can connect you with the best lender options available. United Mortgage Associates is a team of licensed and regulated financial professionals. It is an experienced team that you can trust to guide you through the complexities of the loan approval process and get the great loan package you deserve.
With years of experience in the township, United Mortgage Associates can get you an affordable mortgage quickly, often in less than 30 days. The search for the best loan possible is complicated. You need a loyal partner you can trust to deliver the best deal possible; contact the team at United Mortgage Associates today!