Wednesday, November 9, 2011

What are underwriters looking for regarding my mortgage loan application?

Obtaining a home loan or mortgage is not as easy as it used to be. Due to the mortgage crash, underwriters are now asked to forensically review each file and each borrower. Although every loan product/program can differ with specific guidelines, what they are generally looking for is:

1.      A middle credit score ideally ranging from 640 and up (there are programs that allow you to have scores as low as 580, but are VERY difficult to qualify for)

2.      No collections within the last 24 months or preferably, none at all (Exceptions may apply)

3.      If you filed any kind of bankruptcy within the last 10 years, no derogatory credit after the bankruptcy.  There are always exceptions, but they must fall within guidelines

4.      Debt-to-income ratio around 43% (below 43% is ideal, above 43% - 55% is for the borrower with the higher credit score and better looking financial portfolio)

5.      No NSF’s (non-sufficient fund fee) in bank accounts, overdrafts and/or negative balances

6.      Reserves are preferred but may not be mandatory in some cases

7.      Consecutive 2 years work history within the same field

8.      Last 2 years tax return…FILED! (Watch out for all the write-off’s…it counts against your income!!)

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