With the current housing crisis, mortgage lenders have become increasingly thorough in their review of mortgage applications and more selective in approving these. They have several factors to consider in choosing whom to grant the loans so knowing and considering these might just make you a more likely client to receive the loan. Here are the top five factors that are reviewed before in-house financing:
- Down-payment you are willing to make
The possible risk in lending is what most lenders consider first. Lenders are likely to see low risk if the size of your down-payment is greater than the rest. If you put more money on the table, the loan lent is less and thus less risky for the lenders. Typically, industrial standards require at least a down payment of 20% of the amount you want to loan.
- Your credit score and history
Lenders take into consideration your credit history to get an estimate of whether you will be able to return the loan you have taken. They do this by looking at how you manage your money. The lenders use the FICO credit scores to see that they fit their requirement. The minimum required FICO credit score varies from lender to lender. You must review your credit score before you apply for the mortgage and identify any mistakes that have lowered it. Your credit score is a very important consideration and it significantly impacts all other factor including whether you get the loan or not, the conditions and terms of it and the interest rate.
- Work history
The lenders also check the potential-borrower’s work history and employment to ensure that he or she would be able to make regular payments. A steady income source is therefore necessary if you want a loan and it is thus not wise to quit a job or to apply for a new one right before applying for mortgage. You can also see The Florence Residences Showflat if you intend to buy property in Singapore with good history.
- The ratio of your debt to your income
The lenders then check any amount you have borrowed before applying for the loan. This is to ensure that the total debt you are in can be paid off with sufficient amount left to return the loan. The debt-to-income (DTI) ratio is used in the selection process and lenders often do not lend to those with a debt-to-income ratio above 43%. The DTI ratio required varies across lenders and to minimize DTI ratio, it is always best to pay off any debts you have to before applying for the mortgage.
- The lone-type you wish to take
There are different types of loans with different standard requirements. If you do not fit on a certain criterion, you may not be granted the conventional loan and if you do, you might not qualify for the amount you have in mind so it is always best to review the requirements before you apply for the loan.
Different lenders fit these requirements to different standards and knowing what the lenders wish to see in the borrowers is always helpful. These above mentioned considerations top the list and must be looked at by the borrowers before they apply for the loan. It is, however, absolutely necessary to maintain honesty to avoid complications.