Mortgage qualification and down-payment
The basic rule is that you generally can qualify for the mortgage loan of two or one-half times your family's income.
For instance, if your household has an annual income of $100,000 a year, you can generally qualify for a $200,000 to $250,000 mortgage.
Lenders use a lot of other factors to figure out how large a mortgage they should give you. For instance, lenders generally think that your housing expenditures (including special assessments, insurance, taxes, and mortgage payments) should not exceed twenty-five to twenty-eight percent of the gross monthly income. Any long-term debts (monthly payments that extend more than ten months) added to the housing expenses must be less than thirty-three to thirty-six percent of the gross monthly income. FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) mortgage loan percentages probably vary.
Additionally, lenders always examine your credit history and employment. It includes examining your income and job and how good you handled and repaid previous loans.
By definition, legal safeguards exist to make sure that this data is used fairly. For instance, the Fair Credit Reporting Act will state that lenders have to certify to a credit bureau about the purpose for which the information is sought and also that it will not be used for other purposes. While, the Equal Credit Opportunity Act disallows discrimination in lending activities based on age, religion, national origin, race, marital status, gender, or because the potential lender obtains public assistance income.
A lender usually expects between five and ten percent down-payment on the house's value and the closing cost payments that are frequently three to six percent of your loan amount. If your down-payment is only five percent, your lender will require a private mortgage insurance (PMI). (Requirements for FHA or VA loans can be different.) Under RESPA, your lender must offer you with information on estimated and known closing costs.
Available mortgage packages will vary widely, and it is important to look into several options to know the one best for you.
When, for example, you're using a real estate broker or agent to shop for certain home, you should consider their advices about mortgage packages and lenders. Look into newspaper business or real estate sections which usually include brief tables about mortgage availability. Check the yellow pages for trusted and nearest lenders in your area. Contact them for terms and rates on the mortgage package you want. Additionally, consider trying the "computerized mortgage shopping service," even such a list may represent only limited number of lenders, and you will be charged a fee.
tags: mortgage, loans, down-payment, payment
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