If you’re interested in purchasing one of the amazing Boston condos for sale currently has to offer either in Back Bay, Beacon Hill or the Leather District you’ll first need to qualify for a home loan. Though there are many qualifications for potential homebuyers, these are some of the most crucial.
Experian, TransUnion, and Equifax are the leading credit history companies, and the information obtained from the three is often valuable to lenders. Specifically, lenders look at your credit scores and payment history before making the decision to move forward with a home loan. The results predetermine how reliable you’ll be during the payment period, which translates into a selected interest rate as well. Good scores get lower rates than higher scores, but the exact percentage varies by lender.
Approximately 20 percent of a Beacon Hill condo, Leather District loft, or high rise penthouse’s value is the welcomed amount of money most lenders appreciate. Placing more than 20 percent is often enticing to lenders, and it may increase the odds of receiving a loan. Down payments below 20 percent can decrease the chance of securing a loan.
A Safe DTI Ratio
Debt-to-Income, or DTI, is the ratio of debt and expenses to revenue and income. Lenders take the amount of your credit card bills, student loans, insurance, government debt, and outstanding bills and add it together, calculate your gross monthly income (the original pay before the company takes Medicare and Social Security out), then take the debt and divide it by gross income. The goal is to spend less than 50 percent on expenses. Your cooperation in determining DTI is to provide a bill for each expense and a weekly or bi-weekly check stub. Utility bills do not count in the loan.
Employment history is a huge piece of the mortgage puzzle. Check stubs prove to lenders that you have a steady job, which shows you have the finances to pay the mortgage. Lenders will contact the workplace for verification. Self-employed and part-time workers must fork over income tax history as proof of employment.