3 anchor things you must have for a successful mortgage

If you’ve never bought a home before or it has been many
years since your last mortgage transaction, you’ll need to freshen up on
the basics. What lenders look for…

The 3 c’s

Cash-this one is a biggie. You need to have cash to
buy a house pure and simple. Gone are the days of successfully using
down payment assistance and seller credits can be tough to come by. One
alternative is obtaining gift money which is permitted on nearly every
mortgage loan program available in the marketplace. All funds use must
be documented and sourced. Typically, to buy a house you’ll need at least $10-$15,000 in some markets as much as $20,000.

Mortgage Tip: Don’t focus on the percent down. If a mortgage
lender asks you how much your cash you have to work with to buy a home
with don’t say 10%. The percent is a function of the purchase price. The
right answer would be to provide the total dollar amount you have or
have access to. Let your lender worry about the percentages of what
that looks like in relationship to how much house you are aiming for.

Income– you must have income to get any kind of a
mortgage (excluding reverse mortgages). Mortgages are made against your
income not against the house. The only way to show your ability to repay
is to show income coming in to offset the monthly obligation. Some
lenders have what are called asset depletion programs that will allow
you to generate income off of an asset. This typically means having
large assets in the bank to draw a proposed income off of which is then
used to qualify for home financing. For the majority of people, you’ll
need to have income to offset the mortgage payment and to keep your debts relatively low in relationship to your income which creates the room for a mortgage payment.

Credit– you must have an eligible credit score able
to secure financing. If you have a credit score anywhere in the 620 or
higher range, you’re in business. In some cases you can also get a
mortgage if your credit score is under 620, with stronger credit
requirements such as a 43% max debt to income ratio.

The reality of it is that every mortgage loan in today’s environment
needs to be fully documented and you must prove that you really can
afford the mortgage. One or two out of three is not going to cut it
either. If you have income, but you don’t have credit, no amount of cash
is going to fix that. If you have cash, but you don’t have credit, that
will not fix the need for need for income. All three components must be
in alignment in order to qualify for mortgage loan financing.

Lenders will closely examine for your full income, cash and credit.
The CCI is how lenders determine how much mortgage and/or home you are
eligible for. If you are deficient in an area, focus on that obstacle
and getting approved for financing can be within your grasp.