When seeking a home mortgage it is important to make sure the lender has certain expertise such as:
1. Specific knowledge of the area which will become particularly important during the Appraisal phases of the loan origination process as values can change quickly in neighborhoods.
2. Having a team with solid relationships of all involved in the process will facilitate the loan process.
3. Having knowledge of State-level laws and regulations is important as not all states treat the mortgage process equally. Every state has its own enormous collection of laws, policies, and requirements that govern lending within its borders.
There are three major types of loans: FHA, VA, and Rural.
FHA has two major requirements: 1) Mortgage Payment Expense to Effective Income which is determined by adding up the total mortgage payment and dividing it by the gross monthly income. The maximum ratio to qualify is 31%. And
2) The Total Fixed Payment to Effective Income which is determined by Adding up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 43%.
Rural Development and VA loans can be obtained with 100% financing for single family owner occupied homes.
Credit Score is a major factor in loan approval.
This article is for informational purposes only and is not a complete summary of information needed to recommend any investment. Consult the appropriate professional to determine how this information applies to your unique situation.
About the Author: Charles Marsala is a LPL Financial Advisor with Benchmark Investment Group with Securities offered through LPL Financial, a member FINRA/SIPC. He can be contacted at Charles.Marsala@lpl.com