Before you embark on the journey of applying for a mortgage, there is one crucial number you must know: your debt-to-income ratio, or DTI. This single...
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Your credit score is far more than just a number; it is the cornerstone of your financial profile and a critical factor in the mortgage application pr...
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The arrival of a notice in the mail announcing that your mortgage servicing rights have been transferred to a new company can be an unsettling experie...
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The down payment stands as one of the most significant initial hurdles in the journey to homeownership. While the allure of a 20% down payment is ofte...
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When you apply for a mortgage, lenders are fundamentally trying to answer one question: How likely are you to repay this large loan? While your credit...
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Choosing a mortgage lender is one of the most significant financial decisions a person will make. While interest rates and loan terms are crucial quan...
Read MoreMost likely, yes. Lenders cannot use an appraisal ordered by another lender. You will have to pay for a new one, and the value could come back differently, which may affect your loan terms.
Lenders use the “Four C’s of Credit”:
Capacity: Your ability to repay the loan, measured by your debt-to-income (DTI) ratio.
Capital: Your savings, assets, and down payment amount.
Collateral: The value of the home you’re buying (determined by an appraisal).
Credit: Your credit history and score, which indicate your reliability as a borrower.
Rates are determined by your credit score, loan-to-value (LTV) ratio, the amount of equity you have, your debt-to-income (DTI) ratio, and the overall perceived risk of the loan. Because they are in second position, rates are almost always higher than first mortgage rates.
An escrow analysis is an annual review conducted by your mortgage servicer to ensure the correct amount of money is being collected each month. They examine the actual bills paid from the account over the past year and the projected bills for the coming year. This analysis determines if your monthly payment needs to be adjusted up (for a shortage) or down (for a surplus).
Ideally, start 6-12 months before you plan to buy. This gives you time to improve your credit score, save for a down payment and closing costs, reduce your debt, and stabilize your employment history without feeling rushed.
