HOW TO PREPARE YOURSELF FOR A MORTGAGE LOAN
The two primary areas that you need to be concerned with as far as prepare for getting a mortgage loan are income and credit. 1. INCOME: For an FHA loan, your monthly payments for your house need to be about 50% of the entire household’s monthly income, MINUS your monthly amount of debt. So, let’s say your gross monthly income is $5,000, and you have $300 worth of monthly payments (car payments, personal loans, etc.). You can get approved for a loan that is half of the gross income minus your monthly debt. So $5,000 divided in half is $2,500, minus the $300 debt – this means that you can get approved for a loan that makes you pay $2,300. This includes the principal and interest on loans, all property taxes, private mortgage insurance, and homeowner’s insurance. As far as income goes, having a steady salary that pays you the same amount every year is ideal. You don’t have to have a job like that for more than a few months, especially if you have had jobs before that or you’ve been in school. However, you’ll have to explain any gaps of unemployment in your past when you speak with a loan officer. 2. CREDIT: Credit scores are absolutely essential in the process of getting a mortgage loan. Just to give you seem hard facts: Minimum Credit Scores for… VA loan: 600 FHA loan: 640 Conventional: 660 It is absolutely necessary to build up some kind of credit for many reasons, and getting a mortgage loan is one of them. A loan officer will require THREE lines of credit that are CURRENTLY opened. That means, if you’ve already paid off your car payment it helps your credit score, but it won’t count toward one of the three open lines of credit. Credit lines are things like rent or mortgage payments, car loans, personal loans, credit card payments, etc. If you absolutely cannot come up with three open lines of credit, they will sometimes be able to pull history from things like paid cell phone bill contracts or utility bills that are in your name. But, if you have no credit right now, PLEASE PLEASE PLEASE go out and take out a loan, open a credit card or something. You can even go to your bank and get a pre-paid credit card from them that will build up your score. (This doesn’t count with the gift card credit cards you buy at the store.) When you do have a line of credit, like a credit card, the way to improve your credit score is to have the lowest balance possible, and the highest credit limit possible. Ideally, you’d like the have your balance lower than 35% of your credit limit. So if you have a $3,000 limit, keep your balance under $1,500, if not under $1,000 if possible. These are the two most important parts to getting a mortgage loan. Getting a job with a good salary is something fairly obvious, and something you don’t have to think too hard about. Credit scores, and open lines of credit, however, are things that not everyone thinks about, and require some attention. So, do some research, don’t just use this as your only reference – use it as something to make you start thinking about it. |
Anne Morgan PatesAnne Morgan Pates has worked in Real Estate and in Sales & Marketing since 2012. She currently runs her own Marketing business, FXBG Real Estate &.Small Business Marketing. Archives
January 2018
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