Factors to consider when applying for a home mortgage in Rogers MN

You have been hunting for a home but do you have the required cash? Well, a home mortgage is an option you need to consider.  There are many potential buyers who sit down waiting to accumulate the required cash. It’s true that the lenders check at the financial status of the borrower but there are other factors they consider in order to lend you the home mortgage Rogers MN has today. Below are factors that will be considered when you apply for a mortgage:

Credit scores

Credit scores is a big factor that lenders consider before your mortgage can be approved. Normally, a credit score of 660 or above is considered prime, and a credit score of 620 and below is said to be sub prime. If your credit score is of the prime range, you get a home mortgage Rogers MN has today of a lower interest rate. If your credit score is in the sub prime class, your approval becomes a little bit difficult and the interest rate given is much higher.

Your earnings

Normally, lenders prefer to qualify a mortgage to someone with a steady source of monthly income. However, there may be other sources of monthly income such as child support, stock dividends, alimony payments and tips. Self-employed applicants usually have a harder time to qualify because of the irregular income which the lenders find it as a higher risk. The self-employed are considered if they have huge amount of savings and a prime credit score because this reduces the risk.

Home Mortgage Rogers MN

Home Mortgage Rogers MN

Debt and income

Debt to income ratio is the determinant of the risk involved that the lenders consider. Most lenders qualify the borrower at the ratio of 28/36. Twenty-eight percent the total expenses that one incurs from the salary such as rent, credit card debt and other recurring bills.  Thirty-six percent represents the gross income before tax and allowances. This shows If the borrower can be able to repay the mortgage on a monthly basis.

Money down

A down payment is a necessity for most lenders. A down payment of five to twenty percent of the total cost of the home mortgage Rogers MN has to offer is required for most conventional loans. Although, government – insured loans have a lower down payment. The down payment also affects the loan-to-value ratio. The amount of equity in your home affects the mortgage you qualify. If you have a larger down payment, you start off with more equity in your home.

Loan types and rates

Conventional loans require a higher down payment, but one must not pay for mortgage insurance, depending on the amount of the down payment. However, the interest rate depends on some factors like the economic state, credit profile and the current market conditions. Your interest rate remains the same in case you choose a fixed rate and varies if you choose an adjustable interest rate. The interest rate is charged by the lenders in order to cover their costs.

 There are more factors to be considered such as the mortgage insurance that gives protection to the lender in case of default, the liquid cash that the borrower is left with after the down payment and other costs. The above factors will assist your mortgage gets approved. Thus, own your dream home by considering a home mortgage in Rogers MN.

For more information click Equity Source Mortgage.

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