Getting a housing loan will depend on the mortgage qualification. The following is a rundown of how this is figured out.
Gross Monthly Income
The amount you get will depend on your gross monthly income. This is the total that you make, not just the amount you take home. When computing the amount, include all your sources of income. Aside from your main job you may have some extra business making money. As long as the cash flow is consistent, include it.
Remember that the income generated must be accounted for in your tax papers. Evaluating all of these may take awhile. If you are unsure of anything, speak with your tax consultant. A loan officer can help you sort out the link between the gross monthly income and the mortgage qualification.
Evaluate Your Debts and Expenses
Next you evaluate your debt. Start by going over your credit debts and any car loans you’re paying. If there are any child support / alimony expenses, put them down also. You must also add in the monthly insurance you pay. Any association fees must also be accounted for.
There are mortgage calculators on the Web. Use them to make adding up of figures much easier.
How Lenders Provide Loans
Lenders use different formulas when providing loans. However, the general rule is that your expenses for the house must not go over 28% of your monthly gross. The costs include the insurance and the property taxes. That is why your monthly gross income is crucial in knowing your mortgage qualification.
The percentage is a bit higher for debt. Generally speaking, it must not exceed 36%. While these rates are common, some lenders can be flexible.
If you make a big down payment, the rates may be more favorable. Some lenders will also be more flexible with a co-signing agreement. If the person is financially stable, the terms and conditions may be modified.
Of course it can also boil down to how you can engage the lender. Some are very strict with their policies, while some are more flexible.
Do Some Research
Computing your finances to check your mortgage qualification isn’t that hard. Using a finance software or consulting a loan specialist will help. The real challenge is finding the right lender.
There are a lot of programs out there. You should take as much time as possible to do research. There are 15 year fixed rate loans and 30 year types. The down payment will also be a factor. Don’t be sweet talked into accepting an agreement. Learn as much as you can about it. In other words, read the fine print.
One final note: the calculators on the Web will show you the maximum amount you can get. This doesn’t mean you should. If you want to save some money for a future home, then get a lower loan.
It doesn’t take a financial whiz to know about mortgage qualification. Just give yourself some time to go through the various deals available in the market. Patience will help you make the right choices.