There is a certain criteria which lenders use to determine whether you qualify for a loan or not. The qualification criteria will also determine the costs and other terms and conditions of your loan. It is therefore important to know about these things before you start looking for the best home loans. You need to take appropriate steps and measures to make sure that you get the the best refinance rates.
Lenders look at your credit score
Home mortgage lenders are interested in knowing your credit score to determine whether you qualify for a home loan. The credit score is calculated based on your credit rating by the major credit bureaus and will be used by different lenders and any other creditors to determine whether you are a good risk or not.
Factors used in calculating credit score
They use your payment history, paying your bills and accounts will affect the credit score negatively. For you to qualify for a home loan, your credit score must be above 600. The credit score is calculated using your debt to credit ratio. Tthis is basically the amount of money you owe against the amount of credit that is available. The credit is also calculated using your credit account age and any new credit you may have applied for.
Income and assets
Home loan lenders will look at your income; they will look at your earning history and whether you are on a stable and regular job. They are also interested in knowing your spouses’ income and your combined assets. Your monthly expenses are required so that they will be able to evaluate the size of loan you qualify for and your level of risk category. A few tips you may need to consider You need to know how much you want borrow. This should be at least below 30% of your monthly income. In order to reduce the costs of your loan, make sure you save a lot of cash towards your down payment. Make sure your credit rating is good. If it is not, you need to pay off all your outstanding bills. Take some time doing some research and shopping around for the best loan deal, this is a big investment which requires proper planning. You can also consult a mortgage broker to help you before you apply.