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The
main determining factor as to whether or not you qualify
for a mortgage is your credit score.
Everyone actually has
three credit scores. One score with each of the three main
credit bureaus … Equifax, Experian, and Trans Union.
Your scores with these
bureaus can range from as low as 300 to as high as 850.
Credit Bureaus will check on the following items:
-
Your credit history (the
past 2 years)
-
Your current income
source
-
Your checking account
activity
-
Your FICO score
Typical scores for the
average person run in the mid to high 600’s. With scores
in this range, it’s fairly simple to qualify for a
mortgage. But scores are not a lenders only concern. Other
important factors include:
1. Stability of
employment: Most lenders will verify that you’ve been on
the same job, or at least in the same field of work, for a
minimum of 2 years.
2. Stability of income:
Most lenders want to verify that you’ve had a stable
income for a minimum period of 2 years.
3. Assets: Most lenders
ask that you have liquid assets in an account such as a
401k or a checking or savings account, to cover at least 2
monthly payment amounts for the mortgage you’re applying
for.
4. History of “On Time”
payments: Most lenders will verify that you’ve made rent
or mortgage payments “On Time” each month for the last 2
years.
Not all lenders require
you to meet these standards. A number of lenders, with
less stringent requirements, will simply charge a higher
interest rate to compensate for lesser standards.
Truth be told, it’s
actually easier now to qualify for a loan than ever
before. Even with a past bankruptcy, you may still qualify
for a loan if you can meet some basic guidelines.
Today there are
literally 100’s if not 1,000’s of loan programs available
from a myriad of different lenders across the country. It
still comes down to one main issue of course … your credit
scores.
The higher your scores,
the more options you'll have available to you.
If your scores are low
however, but you have compensating factors such as 1 and 2
above, it’s likely that you can still qualify for a loan.
You might even be able qualify for a loan of as much as
100% of the purchase price.
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