Home Mortgage Eligibility Determining Qualification
Knowing how much house one can afford is a critical question for prospective homeowners. Many interested buyers have no idea what size home mortgage they qualify for, so they end up trying to take out the largest loan a broker or lender will approve. This approach to acquiring a home mortgage is not necessarily the wisest option. A trusted mortgage company will go beyond the formula of simply determining someone’s basic eligibility and actually take into consideration the security of the homeowner’s financial future. It is important for prospective homeowners to employ a reliable and trustworthy mortgage broker that will explain how home mortgage eligibility is determined and lock in the best possible mortgage rates.
When assessing whether an individual qualifies for a home mortgage many things are taken into consideration. Typically, a monthly mortgage payment should remain under 45 percent of one’s gross income. Some mortgage companies will approve loans ranging from 45 to 55 percent of the individual’s gross income if they have a good credit history. However, it is critical that homeowners understand that they will actually be making their home mortgage payments out of their net income. Other expenses, such as taxes, car payments, credit cards and other loan payments must be considered when deciding what size home mortgage is truly affordable.
The debt-to-income ratio is another factor that is taken into consideration when determining eligibility. Brokers like to see that the debt-to-income ratio does not surpass 45% of gross income. A mortgage broker can help homeowners calculate where they stand financially in order to determine what is the most feasible loan option. Mortgage companies are just like any other business; they have to make money to survive. In order to make money they charge interest on the amount they lend. A reputable mortgage broker will provide fair and competitive interest rates and work to secure a home mortgage that positions their client toward financial stability and retirement.
Many individuals cringe at the thought of their credit score, and yes, a broker will look at an individuals credit history; whether the borrower has credit cards maxed out, bankruptcy, late payments, extreme monthly payments, or collections. Each of these factors is important when determining home mortgage eligibility, but there are many options available for those with a less than excellent credit history. Loan programs are available for individuals with a wide range of credit histories and financial situations.
Before even beginning to search for a new home, a vacation home, or an investment property, an honest mortgage company should be consulted. They can help buyers understand their financial situation and just how much house they can afford. By seeking the guidance and advice of a mortgage broker, a prospective buyer can secure a home mortgage that is tailored specifically to their financial situation. Purchasing a home is a large investment and the importance of locking in the right home mortgage from a trusted mortgage company cannot be overstated. Additionally, the house-hunting process should be exciting and enjoyable! Being well prepared, educated and working with the right mortgage broker will ensure the best investment is made.
Anything can happen in the future. Not only can a dream job be secured, but a current job can be lost. If the latter occurs, then meeting current debt obligations can be very difficult, and a mortgage can become practically impossible to pay. Thankfully, mortgages can be made affordable again, with lower mortgage refinance rates reducing repayments significantly.
Refinancing home loans is one of the most effective ways to deal with mounting financial pressure emanating specifically from a mortgage debt. While the deal was affordable when it was initially agreed, fluctuations in the economy may have changed things dramatically. So, striking up a new and more affordable deal becomes necessary.
Thankfully, there is little trouble in finding mortgage refinancing schemes with most mortgage providers offering the option. In fact, your own mortgage provider is probably the best port of call. And, so long as the rate charged is good, then saving money and lowering financial stress are both guaranteed.
What Does Refinancing Mean?
As the name suggests, a refinancing deal effectively changes the terms of a financial agreement in an attempt to make it more affordable. When it comes to mortgages, the only way to ensure that this is the outcome is to have lower mortgage refinance rates than those charged in the original mortgage agreement.
Refinancing home loans effectively means buying out the remaining balance with a second mortgage that boasts a lower interest rate. Lowering the interest is always good news for borrowers. While perhaps just $50 or $100 may be saved on the size of a mortgage repayment, over the lifetime of the mortgage, it can translate to tens of thousands of dollars.
For example, on a good mortgage refinancing scheme, if the mortgage balance is $165,000 after 5 years of a 30-year term and monthly payments of around $580, a refinancing loan of $165,000 is used to buy out the balance. The repayments over 30 years then fall to $460.
Key Benefits to Choosing a Refinancing Loan
There are several benefits available to those mortgage holders that opt to secure lower mortgage refinance rates. The lower repayments means there is extra cash available for other bills and expenses, so borrowers find themselves in a very strong financial position over just a few months.
Another key benefit is that, because refinancing home loans means paying off the original mortgage, the credit score of the borrower is improved greatly. It does not matter that a loan was used to clear it, the fact is the mortgage was paid off in full. A high credit score means lower interest rates in future loan deals.
However, it is important to keep in mind that even with a good mortgage refinancing scheme, the term of the refinancing loan will extend the debt to the original term at least. So, a 30-year mortgage with 10 years paid up, reverts to a 30-year term when the refinancing deal is done. The interest paid is, therefore, much higher over time.
Securing The Best Rates
Finding the best mortgage refinancing rates is not too difficult, but it is important to know where to find the right refinancing loan. The current mortgage providers are the best place to start, with their interests served by having the original mortgage paid off in full. Also, getting a lower rate is more likely here.
However, the Internet is also a great resource, with comparison sites providing the fastest identification method for the lowest rates out there. Keep in mind though that refinancing home loans are a major investment, so accurate information is essential to find the right deal.
And, of course, as with all deals done over the Internet, check out the reputation of the likely lenders before signing up to a mortgage refinancing scheme. So, consult the Better Business Bureau website or the Verify1st site first.
