subject: Do You Have What It Takes To Qualify For A Mortgage? [print this page] There comes a point in an individuals life where certain sacrifices have to be done. When push comes to shove, you may consider applying for a Washington DC mortgage loan. This is a financially and emotionally difficult decision to make. However, some people who took out mortgage loans were able to successfully pay their debt by following a strict payment scheme and having utmost discipline in their daily purchases.
Before you even consider taking out a mortgage loan, you first have to know if you qualify for one. Most lending institutions perform extensive background checks of potential borrowers before they are approved for the loan. It therefore pays to know the various criteria these institutions have when they grant loans. Consider your capability to pay off the debt before signing any binding agreement.
Take a good look at your credit profile to have an idea of your credit history. Your credit profile contains information such as the credit types you have, the kinds of payment you make, and the duration of each credit. Most Washington DC mortgage lending institutions will give you a high credit rating if you pay your dues on time and if you finish paying off your loans in the shortest possible time.
Another financial criterion taken into account when a person applies for a mortgage loan is his debt-to-income (DTI) ratio. The DTI ratio reflects a persons ability to successfully pay off a proposed loan. Your DTI is computed by dividing your total monthly expenditure with your net monthly income. For instance, a person earning $1,500 a month (after taxes) with an expenditure of $700 on utilities and other payables would have a DTI ratio of 46.67 percent. The lower your DTI, the higher your chances of getting approved for a mortgage.
Having a high DTI ratio means you have a slimmer chance of getting a loan, as most lending firms only entertain people with DTI ratios from 28 to 44 percent. You may opt to bring your case to sub-prime lenders who consider people with DTI ratios as low 55 percent as candidates for a loan. However, sub-prime lenders have the tendency to offer much higher rates.
It would be good idea to go online and use mortgage calculators found on various websites. Mortgage calculators include different parameters such as monthly income, credit rating, and housing type to help you estimate your chances of getting a Washington DC mortgage loan. Some also provide information on how much youll have to spend monthly.
