THE FIVE “C”s OF A HOME LOAN
by MadhuRaj Panikkar, Valley Savers Mortgage, LLC.
If you're thinking about buying a home but unsure whether you could qualify for a mortgage or have enough cash for a down payment, you might be worrying too much. Yes, credit standards are higher now than they were a decade ago. But they actually are about the same as in the mid-1990s. Factor in today's very low interest rates and current home prices, and affordable mortgages are within reach for many qualified borrowers who may have been hesitant to enter the market.
It's important to remember that Freddie Mac or FNMA doesn't make loans directly to borrowers; we give advises and help people to get mortgages that meet their requirements from lenders. When deciding whether to make you a loan, lenders evaluate following five Cs:
Credit - Your record of paying bills and other debts on time. Believe it or not, It ALL starts with the CREDIT. You can make a million dollars a year, & if your credit is not up to par, you are dead in the water.
Collateral - The value of the home that you plan to buy.
Capacity - Your current and future ability to pay back the loan. Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on a mortgage comfortably.
Capital - The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash. Having these reserves proves that you can manage your money and have funds, in addition to your income, to help pay the debt.
Cash to close - Another important consideration is the down payment - the percentage of the cost of the home that you put down when you buy it. Although preferred is a 20 percent down payment, mortgages can be had with much less. In fact, homebuyers put down an average of 14 percent, according to a recent RealtyTrac report. Freddie Mac has long allowed for 5 percent down, and FHA programs are available to qualified borrowers with as little as 3 percent down. If you put down less than 20 percent, however, your interest rate could be a little higher and you must purchase mortgage insurance.
Valley Savers Mortgage, LLC is a licensed Mortgage adviser and help people to obtain all types of home and business loans in Arizona from 2007. Madhuraj Panikkar (RAJ) has more than 2 decades of experience in helping Arizona community to obtain a mortgage with a positive experience and at reasonable cost. Raj can help with Credit issues, home purchase loans & refinances.
Madhuraj Panikkar –NMLS 170170
Valley Savers Mortgage, LLC; NMLS#760271; AZ Lic:MB-0918386
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