Lenders are ready to work with qualified buyers.
In the past 12 months the mortgage industry has traveled back in time. All of the mortgage products born during the early part of the decade are gone and we are back to the 30-year-fixed-rate mortgage. Many home buyers are under the misconception that the mortgage industry has hung up an “Out of Business” sign. In reality there is an abundance of mortgage money available at some of the best rates we have seen in 40 years.
A bank’s goal should be to help borrowers become homeowners for the long term. This means borrowers should have a minimum of a 10 percent down payment, spend no more than 45 percent of their monthly income on their monthly obligations and have a demonstrated record of excellent credit management.
Today lenders verify that borrowers have the funds to close on the loan. This is easily verified through bank statements. They will also confirm income history. These two items will provide the bank with evidence of the borrower’s “ability to pay.”
The next step is for the lender to assess the applicant’s “willingness” to repay. This is done through ordering a credit score. The credit score provides a look at how the borrower has handled his or her credit obligations in the past. Generally a credit score of 700 or better denotes excellent credit. The final step in the process is for the lender to obtain an appraisal of the property. Today is a wonderful time to be coming into the home-buying market. Inventories are high, prices are reasonable and interest rates are low.