Some Key Mortgage Factors you Should Know

by Pamela Watson 06/02/2019

Are you planning to buy a home? There is a chance that you will need a mortgage to finance the purchase. You can get mortgages from credit unions, banks, or other financial institutions. The fact is that you must meet some basic qualifying criteria before you qualify for a mortgage. 

Depending on the lender, there are different requirements that you have to meet to qualify for a mortgage. Apart from that, the type of mortgage that you get depends mainly on the lender you use. Here are five key mortgage factors that you must know:

Your Credit Score 

Your borrowing behavior and past payment history determine your credit score. Therefore, your lender checks your credit history when you apply for a mortgage. The first thing a lender will do is to check your credit score. When you have a higher credit score, getting a mortgage with a reasonable interest rate will not be difficult.

Your Debt-to-income Ratio 

The Debt-to-income ratio (DTI) is the amount of debt you have compared with your income. This ratio includes your mortgage payment. For you to qualify for a conventional mortgage, your DTI must not be more than 35 percent. Some lenders may allow you to borrow a little more while some may have stricter rules. If you have a massive debt, what you can do is go for a cheaper home with a smaller mortgage or you clear your debt before you consider borrowing for a house.

Your Down Payment

Typically, the lender wants you to have some equity in the home by putting money down. Your investment is to ensure that the lender recovers all the money they have loaned you should you default. Therefore, you are required to put down 20 % of the value of your home and borrow the remaining 80% when buying a house. In some cases, a mortgage requires a 5% down payment, while other mortgage types may permit a 3% down payment for a highly qualified lender.

Your Work History

All lenders, irrespective of the type, will demand to see your proof of employment. They check to make sure that you have a stable income and have been working for at least two years.

The Value and Condition of the Home 

Lenders will be interested to know the value and the condition of the home you are buying to determine if the house is actually worth the amount. A home inspection and home appraisal are needed to make sure the home you are buying is in excellent condition and of good value.

Speak to your real estate agent and financial consultant to get prepared for your home buying process.

About the Author

Pamela Watson

My Resume

Specialties: Buyer's Agent, Listing Agent, Relocation, Short-Sale
Since 1979, Pam has been dedicated to providing the most comprehensive, effective, and caring of Real Estate services. She is known and trusted throughout Solano County as a professional who is committed to her clients' real estate success. 
Pam is celebrating her 38th year selling Solano homes with notable results. She has helped over 1,700 families realize their real estate goals during her career.
Pam has lived in the area since 1979 with her husband, who is a licensed contractor/carpenter. They are the parents of three sons, all of whom were raised in Fairfield. Pam and her husband designed and built their own home in Fairfield, and she is very knowledgeable in the area of construction. 
Always happy to share her "ground up" knowledge of real estate with clients, Pam's extensive knowledge of the area and its homes have been of great benefit to those who are new to the area and to those who are simply changing neighborhoods. 

My Experience

CRS: Certified Residential Specialist (Top 5% in the Nation)
GRI: Graduate of the Real Estate Institute
PMN: Performance Management Network
SRES™: Seniors Real Estate Specialist
RRC: Referral & Relocation Nationally Certified
ASP: Accredited Home Staging Professional 

My Credentials and Memberships

Agent of the year 1996, 1997, 1999, 2000, 2001, 2007, 2008, 2009 
Listing Agent of the year 2002, 2011 & 2012.