Rate Your 4 C’s
Before applying for a mortgage loan, look at yourself as a borrower and ask:
Do I have a history of saving?
Do I have enough cash in the bank to make a down payment and pay the other costs of buying a home?
Has my income been steady and do I earn enough to make the new payment and still pay my monthly bills?
Debt-to-Income Ratio: The maximum monthly amount that the borrower can spend for the house payment and all creditor debts. This percentage is also pre-set depending upon the loan type selected. The debt-to-income ratio could be between 35 and 45 percent.
Example: Loan program selected has a 41 percent maximum limit on the amount you can spend monthly for the house payment plus creditor payments. Assuming your gross monthly income is $1500, this means that the most you could have going out for the house payment plus all creditor debt is $615 ($1500 x 41% = $615)
How about my credit? Do I feel that I have handled credit responsibly? If I had credit problems in the past have I solved them and improved the way I borrow and repay?
Is the house I want to buy worth the amount of money I would be paying for it? Is it in good shape?
Would making a loan to you be risky for a lender, who must be sure to get the company’s money back? If you were a lender, would you make a loan to a person with your financial habits?
