How To Qualify For A Mortgage In Today’s Market

It's quite possible that there has never been a better time to buy a home in San Diego than right now. Recently, interest rates dropped once more -- the average  rate for a 30-year fixed-rate loan decreased to 4.79% from 4.93%, according to loanrateupdate.com -- and there is certainly still lots of inventory, keeping residence costs relatively low in our area.

Those positive elements, nonetheless, are often offset by tighter lending standards, causing a lot of potential borrowers to shy away from applying for a mortgage. As a Member of the Top 5 in Real Estate Network®, I've learned that it definitely boils down to four principal elements that can impact a lender's decision:

Your capacity to make a downpayment - generally between 3.5% and 20% of the purchase cost -- needless to say, the bigger the downpayment, the better your odds of securing the mortgage.  It is also easier to get a loan if you are trying to borrow $417,000 or less.  Above this amount the loan will fall under slightly different lending guidelines.
Two years of steady employment - at the same job or inside the very same field.
Good (but not necessarily ideal) credit score - today, around 660 could do it.
Monthly income between two and 3 times the estimated monthly mortgage payment.  Much of acquiring a loan boils down to your debt to income ratio.  This time around the banks want to get paid back.
I have had quite a few clients, on the other hand, who have qualified for a mortgage without entirely meeting the above criteria ... so don't rule your self out too soon. There are a number of other actions you can take to secure a mortgage, for example these suggestions from BusinessWeek:

Meet with a lender anyway.  You may be surprised to find out that you do qualify after all , and if not, the lender can tell you precisely which areas to focus on in order to qualify within the near future.  Ask your real estate agent if they work with a specific lender or mortgage broker. An experienced agent works with several lenders and will be able to point you in the right direction.

Get a co-signer. This is not simple, since if you default on a loan, the co-signer will probably be responsible for paying it. But when you know someone with excellent credit who has absolute faith in your capability to pay, a co-signer could possibly be a workable option.

Plan for the future. If it turns out you can't qualify today, have your real estate agent and lender assist  you to map out a plan for improving your credit qualifications over the coming months.  If you are serious about home ownership you will be able to properly structure your finances and put yourself in a position to qualify.
For more information about applying for a mortgage, please feel free to contact me and I will refer you to a lender that best fits your needs. And be sure to share this article with family members and buddies who may well also be considering a purchase or may need to refinance -- this market is just too great to miss out on!

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