You've heard on the news how difficult it is to obtain a home mortgage. Don't believe the rumors! Mortgages are still available, even for borrowers with credit scores as low as 620. Each file is scored separately and adjustments to rate can accommodate for less-than-perfect credit. Borrowers continue to lower interest rates, lower payments and consolidate high-interest debt by refinancing.
Strength of Your Mortgage Application
Mortgage decisions are made based on the strength of the mortgage application file. Some (not all) of the factors considered are:
Credit score- 620 and up
Assets- The more money a borrower has in "reserves," the better.
Loan-to-Value (LTV)- Mortgage lenders like to see more equity left in a house after a refinance. With property values falling, most of the programs require 90% LTV or less. (mortgage balance divided by property value)
Income (DTI)- DTI is the ratio of the amount of a borrower's monthly bills divided by their income. Most programs require 45% or less, but if the other areas of the mortgage application are strong, there are loans that have been approved with DTIs as large at 68% recently.
