It is most important to know how much you can afford when applying for a loan. Lenders must determine whether or not you will be living within your means prior to making a loan. There are three major factors considered by lenders when you apply for a loan. These three factors must work well together. Lending today is that simple. If any one of these factors doesn’t work then it creates too much risk for the lender to lend money on a particular property.
Your Personal Credit History
All lenders will want to see a copy of your credit report as part of the loan application process. The report will list all of your long term debts (credit cards, mortgage payments, automobile and student loans, etc), as well as your payment history. Your credit bureau report gives an indication to the lender as to both your ability and willingness to pay your bills responsibly.
Debt-to-Income Ratio
The Debt to Income Ratio (DTI) shows the percentage of your gross monthly income needed to pay your principle, interest, taxes and insurance (combined monthly payment or PITI/Front End Ratio) and your PITI plus other calculable debt including credit card, student loans, and installment loans (PITI + Other Debt/Bank End Ratio). The DTI indicates your ability to pay your bills based upon your current level of gross monthly income.
Loan to Value
The Loan to Value (LTV) is a measure of the amount of your required loan relative to the value of the house. If you borrow 80% of the value of a house, your LTV is 80%. For example, if a house is purchased for $500,000 and the loan is for $400,000, the LTV is 80%.
Based upon your down payment, credit history, Debt-to-income ratio and loan-to-value ratio, United Mortgage Express will help you to apply for a loan for the purchase or refinance of your home in four easy steps.
