Home Buyers Guide

Credit history

It is extremely important that you know what is in your credit history.  Bankruptcy's and Foreclosures are 2 things that may affect your ability to qualify for a mortgage loan.  Judgements and collections can also be a problem. 

It is possible at Sunstreet Mortgage to lend with credit scores as low as 580.  Credit scores will affect your interest rate and reserve requirements.  Sunstreet Mortgage has a Credit Help Department that can assist you with your credit concerns.

Monthly debt

Your monthly debt is calculated into the Total Debt-To-Income ratio when qualifying for a loan.  It is advised not to make any large purchases prior to prequalifying for a mortgage as this may effect your ability to qualify.

Total Debt-To-Income Ratio's are calculated by dividing your total expenses (mortgages, property taxes, homeowners insurance, homeowners association dues, car payments, installment loans, credit card payments, student loans, alimony and child support, ect.) by your gross income.

Different loan programs will vary in their maximum debt-to-income requirements.

Income

Qualifying for a loan is generally based on gross monthly income.  Examples of income would be: wages, child support, alimony, self-employment income, investment distributions, rental income, ect.

Assets

When qualifying for a loan the assets that the lender would need to document would be the funds for down payment, closing costs and any reserves that are required by the loan program being used.  These assets have to be verified for the previous 2 months.  Cash in the "mattress" is not acceptable.  The "cash on hand" must be deposited and seasoned for at least 2 months.  Examples of funds that can be used: checking, savings, money markets, retirement funds, stocks and bonds, ect.

It is also advised that when you are ready to obtain a prequalification you refrain from moving monies from one account to another.  Any time money is moved the lender is required to source those funds.  This can require you to provide more paperwork than would originally be required.

Payment

It is important to know what monthly payment you are comfortable with.  Many time you will qualify for more of a payment than you are comfortable with.  The reason for this is because lenders qualify customers based on their gross income.  Make sure you know your comfort level.