Mortgage second

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Several types of mortgage loans are being floated in the market by multiple financial institutions. However, it is advisable to have information regarding various criteria that are taken into consideration by mortgage lending firms while determining the eligibility of a borrower for a mortgage home loan. As these criteria determine the interest rate on the loan, knowledge about them is even more vital.

The most important criterion that lenders usually go for is about the repayment capability of the borrower. Credit history and FICO scores of the borrower provide ample information regarding financial status and the repayment history of the borrower. Lenders usually give prime importance to borrowers having a reasonable credit history with credit scores of more than 600. Credit reports of the borrower can be obtained from any of the three leading credit bureaus in the U.S.. Credit reports contain details such as the income of the borrower, his credits, and any late payments made towards rent, mortgages and credit card bills.

Another important criterion is the debt-to-income ratio of the borrower that determines the eligibility and interest rate on the loan. Borrowers having a debt-to-income ratio of 28/36 are considered ideal for a mortgage loan. However, certain lenders entertain customers with a poor debt-to-income ratio. But, loans to these customers are provided at a higher interest rate and require a high down payment.

Apart from these, the customer is expected to have a steady income and a satisfactory employment record so as to multiply his chances of getting a mortgage loan approved. The customer must be employed with a single employer for a minimum period of 2 years in order to be eligible for a loan.

Interest rates on the loan also vary if the loans are federally insured or assured by any private mortgage insurance companies.

By: Jared Lee

The mortgage closing costs are an integral part of the home mortgage loans. Lenders do incur some expenses in the process of developing a home mortgage loan for you, their time spent is not free, therefore somebody (usually the borrower) needs to pay for their time.

However, as a borrower, you should not overpay these costs. Many lenders try to inflate these expenses. This article will equip you with some basic knowledge so that you understand how to check these expenses and not overcharged by lenders.

There are two types of mortgage closing costs: recurring and non-recurring.

Non-recurring is the one-time fees you pay. Example of such fees are: origination cost, title search, appraisal fee and credit reports fees. Recurring fees are those you pay every year, these include mortgage interest, property tax and insurance.

To make sure that you’re not overpaying these mortgage closing costs, demand the Good Faith Statements from your lender. This is an estimate from a lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees. Study the statements carefully, pay close attention to the origination fees, loan-processing fees and all other fees listed in there.

The Good Faith Statements provide critical information for you to do comparisons with other lenders and get the best deal for yourself. If there is a fee that you don’t understand, ask your lender to explain. Make sure the origination fee is not more than 1.5% of the total loan amount and the loan- processing fee should not be more than $400. If these fees are higher than those numbers, check if your lender can reduce them. If they can’t reduce these fees, then I advise you to look for other mortgage company that can provide you lower mortgage closing costs.

All the expenses accrued in the process of creating a home mortgage loan will be paid by you. This payment is in the form of mortgage closing costs. These expenses are not always paid up front, some portion are presented at closing while others may be integrated into the loan. So do your homework well by requesting and paying close attention on the Good Faith Statements if you want to avoid overpaying.

There is no single number that can be applied across the board for mortgage closing costs. Different companies may have different requirements and various states may also have different taxes as well. With some basic knowledge, you can gather the necessary information while applying for your home mortgage loans.

By: Yvonne Suzannah