Income: One of the most important factors any lender look at is borrowers’ income: whether Borrowers have enough income to cover monthly mortgage, tax, and insurance for their home purchases or refinancing an existing mortgage.
A peculiar situation comes—particularly for refinancing, is when borrowers no longer qualify for refinancing because their income has dramatically decreased, when the main breadwinner either pass away, in divorce cases, or no longer working.
When there isn’t enough income to cover the monthly mortgage and borrowers are more likely to default, everybody loses: The Banks, Fannie Mae/ Freddie Mack (Government), the Investors, and you. Debt to Income Ratio is there for a reason: It measures borrower’s income against home payments.
Credit Score: Surprisingly, borrowers don’t need a very high credit score to qualify for a loan. Normally, if your Fico Score is 640+, you’ll qualify for almost any loans. However, Interest Rates are credit-driven. If your FICO score is below the “ideal” loan score requirement, interest rates will adjust higher.
In rare cases, down payment, reserves, and other factors may offset an interest rate increase to certain extent. Remember, a loan file from a processing, underwriting, and approval perspective will always tell a story: Your Financial Story. The prologue and conclusion isn’t written in stone.
Pre-Qualification/ Pre-Approval: Pre-Qualification and Pre-Approval are almost interchangeable terms. Pre-Qualification is a processing of qualifying. Pre-Approval is the end result of the qualifying process: Whether or not borrowers are Pre-Approved for a home loan.
Pre-Qualification & Pre-Approval provide no guarantee & commitment to lend, because there are so many variables involve from the get go: underwriting conditions, home purchase conditions, borrower disclosures. Pre-Qualification & Pre-Approval provide certainty and confidence to the home Buyers, their Agents, and the Sellers.
A Seller/Listing Agent will not accept an offer without a Pre-Approval Loan letter from a lender. Such letter—though without a definite commitment, let seller and listing agent know that the borrower with the existing offer is qualified enough to purchase the house.
Closing Cost/ Cost of Getting a Home Loan: Closing Cost varies from loan to loan: USDA, FHA, Conventional, or Jumbo loans. Further complicated, Closing Cost is also associated with interest rates borrowers want. Standard closing cost for almost all Mortgage lenders includes Origination Cost, Underwriting, Processing, Lender’s Title Insurance, Escrow, Appraisal, etc. The important thing to remember is that closing costs are flexible and transferrable in a Purchase or Refinance Transaction.
At Virchu Financial & Investment, we are 100% transparent regarding about your cost. Regardless of how closing costs are paid or transferred, prior to closing and funding, we’ll go through every cost associated with your mortgage—making sure you don’t pay one more cent if you don’t have to.