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February 07, 2018
4 Tips For Getting A MortgageWhen you’re looking for the right house to buy, there are several questions you need to ask your agent before hiring them. That same logic applies to getting the right mortgage — only the lender will be asking you the questions.

Here are the four criteria mortgage lenders are concerned about most:

Check your credit score

Your credit score has a major impact on whether or not you get approved for a mortgage, and your FICO score is the one most lenders turn to for determining your risk factor. The FICO rating range goes from 300 to 850, with the average in 2016 being 699. A healthy credit score should be about 720, or close to that amount. A score of 580 is usually the bare minimum to qualify for most loans.

If your credit is poor to midrange, it doesn’t mean you won’t be able to qualify for a loan. It just means you’ll need strong compensating factors like a bigger down payment. Or work on ways to fix your credit.

Have steady employment

Having a steady job is just as important to a lender as having good credit. It makes sense: If you were going to lend someone $200,000, wouldn’t you want to know they had a job?

You’ll need to show proof of employment to qualify for a loan, and it’s good to have been at the same company or similar industry for about two years at the minimum.

Have a low debt-to-income ratio

Your debt-to-income ratio (DTI) is basically how much you owe versus how much you make. You take your monthly income then factor in how much you pay toward minimum credit card amounts, student loans, car loans, etc. You can also use an online DTI calculator to figure out your exact amount.

Your minimum payment obligations should be much, much lower than your monthly income. In most cases, you’ll have a harder time qualifying for a home loan if your DTI is above 36 percent or so. But keep in mind, these are just guidelines. Every lender has their own unique qualification standards.

But there are other options available. Fannie Mae sets its maximum DTI at 36 percent with a low down payment and credit scoring, or about 45 percent with a higher down payment and credit score. If you’re a veteran, you can also look into a VA loan, which requires zero-down financing and is much more lenient with your DTI.

Include your assets

Having assets always helps with getting a good loan. Assets can include cash or items easily converted to cash, savings accounts, stocks, bonds, and securities. Assets may be required when purchasing a home. They can also be considered a compensating factor, which may offset a weaker factor, like a credit score.

Are you interested in finding out more about home loans? First Option is always ready to help you achieve the mortgage that’s best for you. Get in touch with one of our team members today, or connect with us on Twitter and Facebook.


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