Obviously it is a great time to refinance with rates so low! I have been asked many times about qualifying as it has been projected through media that credit is harder to obtain. So what are mortgage lenders looking for?
- A Minimum Credit Score of 580 with FHA and 620 with Conventional Financing. The higher the credit score, the better chance you have of getting the lowest rate.
- Assets-while we can get borrowers qualified without assets, these always strengthen a file. We are looking for a minimum balance of 2 months times your principle interest taxes and insurance payment.
- Ratios-the lower the better. We take all the debt on credit, plus the proposed house payment divided by total gross income. Ideal housing ratios would be 32 housing ratios over 43% total However, you can get approved with higher ratios. This is where assets and credit score may assist in factoring in the final approval.
- Mortgage history-while you can have some late payments upon exception and compensating factors, a 12 month period with no late payments is ideal.
- Employment-we are seeking a 2 year history with minimal gaps, same line of work and consistent income. Bonuses and commissions are over a 2 year history. Part time jobs require a minimum of years. Self Employed borrowers require a 2 year history with income averaged through full 2 year tax returns, using the net income after all adjutments.
- Loan to Value-this depends on program and loan size. However, the more equity, the better rate and options you may have. Although, don't be discouraged, there are still ways to help many people that have seen declines in value.
These are just general guidelines. Every situation is unique. If you are interested in a free consultation, please feel free to contact me @ jbrinson@rivercitymortgage.com.
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