If you have been paying rent for years, for staying in a home that is not yours, it is perfectly natural to feel that it is time for a change. Besides the fact that rent can be expensive, having your own home at last seems like a much better idea, especially after a certain age, when you have a stable job and are looking for more stability in your life.
Mortgage loans can be used by individuals who want to buy a new home, as well as by legal entities. To be eligible for such a loan, you will have to meet the conditions imposed by financial institutions that grant the amount of money you need.
According to lenders experienced with cash out refinance near me, the importance of preparing your credit file is significant, and you must be sure that you have successfully ticked all the criteria. If you work with a credit broker, you can raise on your conditions for a very good mortgage and thus you will receive bank offers that meet your requirements.
The mortgage loan is typically granted to people aged between 20 years and 65-70 years (the age of completion of the loan). All banks require a minimum amount of monthly income and also consider the amount and the type of your income as well as other debts you might have.
Mortgage eligibility also takes into account details related to your current job (precisely how long have you been working for your current employer), your FICO score, the debt-to-income margin, how long you have worked for your current employer, as well as the value and condition of the home you want to buy.
Here are more details about these criteria.
- FICO score
The FICO score is determined by the payment history of previous loans, the number of queries at credit bureaus, the duration, type and frequency of past installments. The lower your score, the lower your chances of receiving the desired credit. Most often, a credit score of at least 620 can guarantee your credit approval, but keep in mind that you will pay a higher interest rate as long as you score under the value of 700.
Buying a home with a low credit score means that you will pay a higher amount of money over the entire duration of the loan. Therefore, you should do your best to increase the value of your score by paying your debts, making the payments on time and also terminate other loans before getting a mortgage.
- Debt-to-income margin
The debt-to-income ratio is the amount of debt you have in relation to your income. In case you have too much debt, you will either have to buy a cheaper house with a smaller mortgage, or make an extra effort to pay off your existing debts before applying for a mortgage.
- How long you have been working for your current employer
A conventional loan, which is the most popular type of mortgage, generally requires at least two years of employment history to qualify. However, in some situations, less than two years could still be acceptable, but only if the borrower’s profile reveals some positive factors able to compensate for shorter income history.
- The value and condition of the home you want to buy
Financial institutions want to make sure that the property you purchase is in good condition and justifies the amount of money you are going to borrow.