Mortgage Approval Process

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Whether you’re a First-Time Home Buyer or seasoned investor, the mortgage approval process can be a slightly overwhelming adventure without a proper road map and good team in your corner.

Updated programs guidelines, mortgage rate questions and down payment requirements are a few of the components you’ll need to be aware of when getting mortgage financing for a purchase or refinance.

While this site is full of useful information, industry terms and calculators that will help you research the mortgage approval process in detail, this particular page was designed to give our clients a thorough outline of the important components involved in getting qualified for a new mortgage loan.

Mortgage Approval Components:

Mortgage lenders approve borrowers for a loan, which is secured by real estate, based on a standard set of guidelines that are generally determined by the type of loan program.

The following bullets are the main components of a mortgage approval:

A borrower’s DTI Ratio is a measurement of their income to monthly credit and housing liabilities.

The lower the DTI ratio a borrower has (more income in relation to monthly credit payments), the more confident the lender is about getting paid on time in the future based on the loan terms.

 

Loan-to-Value, or LTV, is a term lenders use when comparing the difference between the outstanding loan amount and a property’s value.

Certain loan programs require a borrower to invest a larger down payment to avoid mortgage insurance, while some government loan programs were created to help buyers secure financing on a home with 96.5% to 100% LTV Ratios.

EX:Conventional Loan requires the borrower to purchase mortgage insurance when the LTV is greater than 80%.  To avoid having to pay mortgage insurance, the borrower would have to put 20% down on the purchase of a new property.  On a $100,000 purchase price, 20% down would equal $20,000, or 20% (LTV)

 

Credit scores and history are used by lenders as a tool to determine the estimated risk associated with a borrower.

While lenders like to see multiple open lines of credit (4) with a minimum of 24 months reporting history, some loan programs allow borrowers to use alternative forms of credit to qualify for a loan.

 

Property Types

The type of property, and how you plan on occupying the residence, plays a major role in securing mortgage financing.

Due to some HOA restrictions, government lending mortgage insurance requirements and appraisal policies, it is important that your real estate agent understands the exact details and restrictions of a your pre-approval letter before placing any offers on properties.

 

Whether you’re looking for 100% financinglow down payment options or want to roll the costs of upgrades into a Rehab loan, each mortgage program has its own qualifying guidelines.

There are government insured loan programs, such as FHA, USDA and VA home loans, as well as conventional and jumbo financing.

A mortgage professional will take into consideration your individual LTV, DTI, Credit and Property Type scenario to determine which loan program bets fits your needs and goals.

Be Smart … Ask Questions … Get Answers!

For more information, call (954) 599-3432 or “Click Here” to send me a message by e-mail

“Click Here” Get Started with your Loan Request

 

To learn about the advantages of being pre-quaified “Click Here”

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