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Do You Pass The Mortgage Lender Analysis? When a mortgage lender reviews a real estate loan application, the primary concern for both home loan applicant, the buyer, and the mortgage lender is to approve loan requests that show high probability of being repaid in full and on time, and to disapprove requests that are likely to result in default and eventual foreclose.

The mortgage lender begins the loan analysis procedure by looking at the property and the proposed financing. If the loan request is in connection with a purchase, rather than the refinancing of an existing property, the mortgage lender will know the purchase price. The mortgage lender does not want to over-loan simply because the buyer overpaid for the property.

The year the home was constructed serves in establishing the financing's maturation date. The idea is that the length of the home loan ought to not last longer than the remaining economic life of the structure serving as collateral. Keep in mind nevertheless, sequential age is only part of this atlanta mortgage rates choice since age need to be considered due to the upkeep as well as repair of the structure as well as its building high quality.

Loan-to-Value Ratios

The mortgage lender next looks at the amount of down payment the borrower proposes to make, the size of the loan being requested and the amount of other financing the borrower plans to use. As a rule, the more money the borrower places into the deal, the safer the loan is for the mortgage lender. On an uninsured home loan, the ideal loan-to-value ratio for a lender on owner-occupied residential property is 70% or less.

Loan-to-value ratios from 70% through 80% are considered acceptable but do expose the mortgage lender to more risk. Lenders sometimes compensate by charging slightly higher interest rates. Loan-to-value ratios above 80% present even more risk of default to the lender, and the lender will either increase the interest rate charged on these home loans or require that an outside insurer, such as FHA or a private mortgage insurer, be supplied by the borrower.

Mortgage Closing Settlement Funds

The lender then wants to know if the borrower has adequate funds for settlement (the closing). In the latter case, the mortgage lender knows the present loan is contingent on another closing.

Purpose Of Mortgage Loan

The lender is also interested in the proposed use of the property. Mortgage lenders feel most comfortable when a home loan is for the purchase or improvement of a property the loan applicant will actually occupy. This is because owner-occupants usually have pride-of-ownership in maintaining their property and even during bad economic conditions will continue to make the monthly payments. An owner-occupant also realizes that if he/she stops paying, they will have to vacate and pay for shelter elsewhere.

If the home loan applicant intends to purchase a dwelling to rent out as an investment, the lender will be more cautious. Note too, that lenders generally avoid loans secured by purely speculative real estate.

Lastly the mortgage lender assesses the borrower's attitude toward the proposed loan. A casual attitude, such as "I'm buying because real estate always goes up," or an applicant who does not appear to understand the obligation he is undertaking would bring low rating here. Much more welcome is the home loan applicant who shows a mature attitude and understanding of the mortgage loan obligation and who exhibits a strong and logical desire for ownership.

The Borrower Analysis

The next step is the mortgage lender to begin an analysis of the borrower, and if there is one, the co-borrower. At one time, age, sex and marital status played an important role in the lender's decision to lend or not to lend. Often the young and the old had trouble getting home loans, as did women and persons who were single, divorced, or widowed. Today, the Federal Equal Credit Opportunity Act prohibits discrimination based on age, sex, race and marital status. Mortgage lenders are no longer permitted to discount income earned by women even if it is from part-time jobs or because the woman is of child-bearing age. Of the home applicant chooses to disclose it, alimony, separate maintenance, and child support must be counted in full. Young adults and single persons can not be turned down because the lender feels they have not "put down roots." Seniors can not be turned down as long as life expectancy exceeds the early risk period of the loan and collateral is adequate. In other words, the emphasis in borrower analysis is now focused on job stability, income adequacy, net worth and credit rating.

Mortgage lenders will ask questions directed at how long the applicants have held their present jobs and the stability of those jobs themselves. The lender recognizes that loan repayment will be a regular monthly requirement and wishes to make certain the applicants have a regular monthly inflow of cash in a large enough quantity to meet the mortgage loan payment as well as their other living expenses. The mortgage lender also inquires as to the number of dependents the applicant must support out of his or her income.

Home Loan Applicants' Monthly Income

The lender looks at the amount and sources of the applicants' income. Thus a lender will look carefully at commission, overtime and bonus income in order to estimate the levels at which these may reasonably be expected to continue.

The lender then compares what the applicants have been paying for housing with what they will be paying if the loan is approved. Included in the proposed housing expense total are principal, interest, taxes and insurance along with any assessments or homeowner association dues (such as in a condominium or townhomes). Some mortgage lenders add the monthly cost of utilities to this list.

This includes housing payments plus automobile payments, installment loan payments, alimony, child support, and investments with negative cash flows. These are general guidelines, but mortgage lenders recognize that food, health care, clothing, transportation, income and entertainment taxes must also come from the applicants' income.

Liabilities and Assets

The lender is interested in the applicants' sources of funds for closing and whether, once the loan is granted, the applicants have assets to fall back upon in the event of an income decrease (a job lay-off) or unexpected expenses such as hospital bills. If income drops, they are much more useful in meeting living expenses and mortgage loan payments than assets that may require months to convert and sell to cash; that is, assets which are illiquid.

A mortgage lender also considers two values for life insurance holders. Mortgage lenders feel most comfortable if the face amount of the policy exceeds the amount or equals of the proposed home loan. Obviously a borrower's death is not anticipated before the loan is repaid, but lenders recognize that its possibility increases the probability of default.

A lender is interested in the applicants' existing debts and liabilities for two reasons. Thus high monthly payments may reduce the size of the loan the lender calculates that the applicants will be able to repay. The presence of monthly liabilities is not all negative: it can also show the mortgage lender that the applicants are capable of repaying their debts.

Past Credit Record

f you are looking for a good mortgage for your new home or even a new mortgage if you are planning on refinancing, you will find that there are many different mortgage lenders that you can choose from. When choosing from the variety of mortgage lenders you want to make sure that you pick a lender that will be able to give you a great deal on your mortgage. Many people have paid the consequences of dealing with less than helpful mortgage lenders, so consider the following tips when you are choosing a lender for your mortgage needs.

Ask Questions

When you are trying to pick a mortgage lender, one thing you should do is ask questions. Be sure to open your mouth and voice your opinions and fears if you have any fears or questions regarding the prospective mortgage. If the lender does not like your questions or you feel that the lender is being dishonest with you, you may want to consider looking on to other mortgage lenders that are available. If lenders can not answer your questions comfortably and honestly, this is a good clue for you to consider someone else.

Look for Variety

When considering mortgage lenders you may want to look for a lender that has a variety of different mortgage options to offer you. Many times lenders that only have one option may not have an option that is suitable for you. Lenders that have multiple options for you to consider will more than likely be able to better meet the individual needs that you have for a mortgage.

Talk to Others

If you have friends of family members who have recently gone through this same process you may want to talk to them and ask if there are any mortgage lenders that they would recommend. If there were any lenders that they met and dealt with that they felt were honest and not trustworthy, you may also want to find out. Getting the opinions of others can be a great way to help you find a great lender without meeting all the lenders yourself.

The Rates

Of course when of the most important thing to look at when comparing mortgage lenders is the rates available on mortgages. What you will end up paying is very important and you want to make sure that you choose a lender that offers competitive rates. Even if you have less than perfect credit, you should be able to find a mortgage lender that will provide you with competitive mortgage rates.

Choosing a lender is one of the most important decisions when you are refinancing a home or purchasing. While there are a variety of mortgage lenders to choose from, you want to make sure that you pick the best one possible for your mortgage. Using these tips on how to choose a lender can help you make sure that you get a lender that will provide you with a great mortgage that will save you money in the future.

Do You Pass The Home Loan Lending Institution Evaluation? When a home loan lending institution assesses a realty finance application, the main worry for both home mortgage applicant, the customer, as well as the home loan lending institution is to approve funding requests that show high likelihood of being paid off completely and also on time, and also to refuse demands that are likely to result in default and eventual foreclose. Just how is the home loan loan providers decision made?

The mortgage lender begins the loan analysis procedure by looking at the property and the proposed financing. If the loan request is in connection with a purchase, rather than the refinancing of an existing property, the mortgage lender will know the purchase price. The mortgage lender does not want to over-loan simply because the buyer overpaid for the property.

The year the residence was developed is useful in setting the funding's maturation date. The suggestion is that the size of the mortgage ought to not outlast the continuing to be financial life of the framework working as security. Note however, sequential age is just part of this decision because age have to be considered because of the upkeep as well as fixing of the structure as well as its construction high quality.

Loan-to-Value Ratios

The mortgage lender next looks at the amount of down payment the borrower proposes to make, the size of the loan being requested and the amount of other financing the borrower plans to use. As a rule, the more money the borrower places into the deal, the safer the loan is for the mortgage lender. On an uninsured home loan, the ideal loan-to-value ratio for a lender on owner-occupied residential property is 70% or less.

Loan-to-value ratios from 70% through 80% are considered acceptable but do expose the mortgage lender to more risk. Lenders sometimes compensate by charging slightly higher interest rates. Loan-to-value ratios above 80% present even more risk of default to the lender, and the lender will either increase the interest rate charged on these home loans or require that an outside insurer, such as FHA or a private mortgage insurer, be supplied by the borrower.

Mortgage Closing Settlement Funds

The lender then wants to know if the borrower has adequate funds for settlement (the closing). In the latter case, the mortgage lender knows the present loan is contingent on another closing.

Purpose Of Mortgage Loan

The lender is also interested in the proposed use of the property. Mortgage lenders feel most comfortable when a home loan is for the purchase or improvement of a property the loan applicant will actually occupy.

If the home loan applicant intends to purchase a dwelling to rent out as an investment, the lender will be more cautious. Note too, that lenders generally avoid loans secured by purely speculative real estate.

Lastly the mortgage lender assesses the borrower's attitude toward the proposed loan. A casual attitude, such as "I'm buying because real estate always goes up," or an applicant who does not appear to understand the obligation he is undertaking would bring low rating here. Much more welcome is the home loan applicant who shows a mature attitude and understanding of the mortgage loan obligation and who exhibits a strong and logical desire for ownership.

The Borrower Analysis

The next step is the mortgage lender to begin an analysis of the borrower, and if there is one, the co-borrower. At one time, age, sex and marital status played an important role in the lender's decision to lend or not to lend. Often the young and the old had trouble getting home loans, as did women and persons who were single, divorced, or widowed. Today, the Federal Equal Credit Opportunity Act prohibits discrimination based on age, sex, race and marital status. Because the woman is of child-bearing age, mortgage lenders are no longer permitted to discount income earned by women even if it is from part-time jobs or. Of the home applicant chooses to disclose it, alimony, separate maintenance, and child support must be counted in full. Young adults and single persons can not be turned down because the lender feels they have not "put down roots." Seniors can not be turned down as long as life expectancy exceeds the early risk period of the loan and collateral is adequate. In other words, the emphasis in borrower analysis is now focused on job stability, income adequacy, net worth and credit rating.

Mortgage lenders will ask questions directed at how long the applicants have held their present jobs and the stability of those jobs themselves. The lender recognizes that loan repayment will be a regular monthly requirement and wishes to make certain the applicants have a regular monthly inflow of cash in a large enough quantity to meet the mortgage loan payment as well as their other living expenses. Thus, an applicant who possesses marketable job skills atlanta mortgage rates and has been regularly employed with a stable employer is considered the ideal risk. Persons whose income can rise and fall erratically, such as commissioned salespersons, present greater risk. Persons whose skills (or lack of skills) or lack of job seniority result in frequent unemployment are more likely to have difficulty repaying a home loan. The mortgage lender also inquires as to the number of dependents the applicant must support out of his or her income. This information provides some insight as to how much will be left for monthly house payments.

Home Loan Applicants' Monthly Income

The lender looks at the amount and sources of the applicants' income. Thus a lender will look carefully at commission, bonus and overtime income in order to estimate the levels at which these may reasonably be expected to continue.

The lender then compares what the applicants have been paying for housing with what they will be paying if the loan is approved. Included in the proposed housing expense total are principal, interest, taxes and insurance along with any assessments or homeowner association dues (such as in a condominium or townhomes). Some mortgage lenders add the monthly cost of utilities to this list.

This includes housing payments plus automobile payments, installment loan payments, alimony, child support, and investments with negative cash flows. These are general guidelines, but mortgage lenders recognize that food, health care, clothing, transportation, income and entertainment taxes must also come from the applicants' income.

Assets and liabilities

The lender is interested in the applicants' sources of funds for closing and whether, once the loan is granted, the applicants have assets to fall back upon in the event of an income decrease (a job lay-off) or unexpected expenses such as hospital bills. Of particular interest is the portion of those assets that are in cash or are readily convertible into cash in a few days. These are called liquid assets. If income drops, they are much more useful in meeting living expenses and mortgage loan payments than assets that may require months to convert and sell to cash; that is, assets which are illiquid.

A mortgage lender also considers two values for life insurance holders. Cash value is the amount of money the policyholder would receive if he surrendered his/her policy or, alternatively, the amount he/she could borrow against the policy. Face amount is the amount that would be paid in the event of the insured's death. If the face amount of the policy exceeds the amount or equals of the proposed home loan, mortgage lenders feel most comfortable. Less satisfactory are amounts less than the proposed loan or none at all. Obviously a borrower's death is not anticipated before the loan is repaid, but lenders recognize that its possibility increases the probability of default. If the survivors receive life insurance benefits, the likelihood of foreclosure is lessened considerably.

A lender is interested in the applicants' existing debts and liabilities for two reasons. These items will compete each month against housing expenses for available monthly income. Thus high monthly payments may reduce the size of the loan the lender calculates that the applicants will be able to repay. The presence of monthly liabilities is not all negative: it can also show the mortgage lender that the applicants are capable of repaying their debts. Second, the mortgage applicants' total debts are subtracted from their total assets to obtain their net worth. If the result is negative (more owed than owned), the mortgage loan request will probably be turned down as too risky. In contrast, a substantial net worth can often offset weaknesses elsewhere in the application, such as too little monthly income in relation to monthly housing expense.

Past Credit Record

f you are looking for a good mortgage for your new home or even a new mortgage if you are planning on refinancing, you will find that there are many different mortgage lenders that you can choose from. When choosing from the variety of mortgage lenders you want to make sure that you pick a lender that will be able to give you a great deal on your mortgage. Many people have paid the consequences of dealing with less than helpful mortgage lenders, so consider the following tips when you are choosing a lender for your mortgage needs.

Ask Questions

One thing you should do is ask questions when you are trying to pick a mortgage lender. If you have any questions or fears regarding the prospective mortgage, then be sure to open your mouth and voice your opinions and fears. If the lender does not like your questions or you feel that the lender is being dishonest with you, you may want to consider looking on to other mortgage lenders that are available. If lenders can not answer your questions comfortably and honestly, this is a good clue for you to consider someone else.

Look for Variety

When considering mortgage lenders you may want to look for a lender that has a variety of different mortgage options to offer you. Many times lenders that only have one option may not have an option that is suitable for you. Lenders that have multiple options for you to consider will more than likely be able to better meet the individual needs that you have for a mortgage.

Talk to Others

If you have friends of family members who have recently gone through this same process you may want to talk to them and ask if there are any mortgage lenders that they would recommend. You may also want to find out if there were any lenders that they met and dealt with that they felt were honest and not trustworthy. Getting the opinions of others can be a great way to help you find a great lender without meeting all the lenders yourself.

The Rates

When of the most important thing to look at when comparing mortgage lenders is the rates available on mortgages, of course. What you will end up paying is very important and you want to make sure that you choose a lender that offers competitive rates. Even if you have less than perfect credit, you should be able to find a mortgage lender that will provide you with competitive mortgage rates.

When you are refinancing a home or purchasing, choosing a lender is one of the most important decisions. While there are a variety of mortgage lenders to choose from, you want to make sure that you pick the best one possible for your mortgage. Using these tips on how to choose a lender can help you make sure that you get a lender that will provide you with a great mortgage that will save you money in the future.