Rochester Mortgage Rates - Know The Facts

Mortgage qualification include several key criteria

. Mortgage lenders will look at many different factors when you apply for a loan, but the most important ones are:

*Your credit score at the time of application.

*The amount of debt youre currently carrying.

*Your income, relative to the amount you want to borrow.

*The size of the down payment you can make.

Credit Scores varies depending on the lender you choose, the type of loan you are interested in, and other factors. If you want to get approved for a mortgage loan, most need a credit score of 620 or higher. Fannie Mae (an organization that buys mortgage loans from direct lender such as Wells Fargo) recently changed their underwriting guidelines to require a higher credit score. They raised their minimum score requirement from 580 to 620. This means that lenders who want to sell their mortgage loans to Fannie Mae have to use that same minimum score as a cutoff point. Many mortgage lenders have followed Fannie Mae in requiring 620 as a minimum credit score.

When you apply for a mortgage loan, the lender will also look at something known as debt-to-income ratio. This is a comparison between your monthly income and the amount you pay toward your debts each month. For example, if I spend half of my monthly income on the various debts I owe, then my debt-to-income (DTI) ratio is around 50%. This is too high by most lenders standards. Some lenders will preaprove borrowers with higher DTI ratios than others. However as a general rule, you should have a DTI of 30% or below. In other words, try to reduce your debt so that it uses up no more than 30% of your monthly income. If you can achieve this, getting a home loan in 2010 will be a lot easier for you.

During the housing boom, there was such a thing as zero-down mortgages. This was when the lender financed the entire purchase, without requiring a down payment of any kind. This was simply a financing tool used to sell a lot of mortgage loans. Following the housing crash and economic recession, the no-money-down strategy is no longer offered by most lenders.

The size of the down payment depends on the type of mortgage loan you choose, the lenders underwriting guidelines, and other factors. If you use the always-popular FHA home loan program, you could put as little as 3.5% down on the mortgage. If you use a conventional mortgage loan (one that is not backed by a government agency like the FHA), then you will probably have to make a down payment of 10% or more. Additionally, if you want to qualify for a mortgage lenders lowest interest rates, theres a good chance you have to put 20% down.

The actual mortgage application process is pretty simple and straight forward. You can do some online to give you an idea of what lenders are offering, but working with a local lender is usually the best option. You can meet with in person to discuss any concerns or confusion you may have, and they can walk you through the entire process.

by: Brain Hook

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