This article is to help you understand the mortgage underwriting guidelines that will determine what your mortgage loan options are to purchase or refinance a home.
Basically one has to understand mortgage loan qualification, mortgage approval, and mortgage loan pre approval are based on the your four major factors;
- your credit history,
- your existing income level vs. debt,
- how much you pay for down payment or equity, and
- your financial status, e.g. assets owned, employment history factors.
Understand these factors are good mortgage underwriting guidelines that determine your options whether you are a first time home owner or you are refinancing your home.
Hence one should be prepared for your home mortgage and its a good idea to ensure your credit is in order so you can qualify for the best rates available.
Some Do-s and Don’t-s:
- Hence, don’t go out and splurging by purchasing some depreciating assets a month or two before you finally make that home purchase decision.
- Build up your savings to ensure a big down payment, this reduces mortgage interest in the long run
- Shop around and use the internet if possible for the lowest interest rates and high flexible repayments
- Look out for pre-payment period clause, this is the minimum time you must locked in before you are allowed to pre-pay your loan amount or increase your monthly instalments that will eventually reduce the total cost of mortgage interest.
- Be sure to read the mortgage documents word for word, focus on the interest rate whether it is fixed or variable, additional cost in terms of insurance be it fire, burglary or even Mortgage Reducing Term Assurance. Be wary the first time makes one a careful and smarter home owner. Many a times, home owners are “robbed” blind by lenders with clauses that are vague, arbitrary and up to the lender to prescribe and you are helpless as you are locked in.
- Consult a professional mortgage consultant might be a good idea to ensure you are protected and pay not a cheap one but one who has your interest in heart. A small loss is better than a huge mistake that will take a big financial toll and years to break free from the bondage of a mortgage loan contract.
When the underwriter is satisfied, you will receive an APPROVAL and CLEAR TO CLOSE. Then the actual closing is scheduled. Bear in mind the lender is duty bound to review your credit and credibility on the day you are about to close that could affect your loan qualification. No joke!
Happy loan busting!