Information Guide on Getting a Connecticut Mortgage
Getting a Connecticut mortgage loan when buying or refinancing a home requires preparation and some careful planning. Lenders have greatly changed their guidelines, and the vast majority of people with shaky credit histories and income issues will no longer fit their lending criteria. Before you request a Connecticut mortgage loan application, make sure you consider what most of today?s lenders will be looking for in order to approve your home loan.
The credit score is a highly considered element by most lenders in the Connecticut mortgage approval process.? The days of getting a mortgage loan with a credit score in the 500′s are virtually gone, and lenders now require a better credit history than previous years to qualify for a mortgage. The exception being an FHA home loan which only requires a 620 credit score, the majority of Connecticut mortgage loans will require a minimum score of 680. In order to get the best rates on your Connecticut mortgage home loan almost all lenders require a 740 credit score or higher.? Paying your bills on time consistently is a key factor to getting your mortgage loan application approved, and with the low rate you want.
Your debt ratio (sometimes referred to as DTI) must fall within the lending guideline parameters in order to qualify for the Connecticut mortgage loan.? The amount of debts you have will have an impact on your mortgage approval and it will also determine how much you can qualify for.? Credit cards, automobile loans and other debts can actually prevent you from getting an approval on your home loan if you have too many of them.? Lenders do not want to see your total current debt payments exceeding 36 percent of your gross monthly income.? Things that can make a significant difference in lowering your debt to income ratio are paying off some of your credit cards or an auto loan.? Or, if you can increase your income this is another way to decrease the debt ratio without paying off the debts.? Both ways will have an impact on reducing your DTI and should be considered prior to applying for a Connecticut mortgage loan if your debt to income ratio is at 36% or higher.
When it comes to income, the vast majority of Connecticut mortgage lenders will not accept stated income on a mortgage loan application.? This type of program was more common in the days that preceded the financial economic condition the country is in today, it?s no longer an option with most Connecticut mortgage lenders.? Today?s mortgage loan approval requires income documentation usually in the form of paycheck stubs, tax returns or W-2?s.? Lenders require verification of your income, so it is necessary to be prepared in having at least two years of steady employment that you can show documentation on when applying for the loan.
If the Connecticut mortgage is for purchasing a home then consideration and planning for a down payment is necessary.? Down payments have become the rule of thumb again and the lender may ask for as much as ten percent down.? However, if you are applying for an FHA mortgage loan the minimum down payment is 3 ? percent.? The lender may also require documentation of where the down payment came from, in other words you cannot just make a deposit into your checking or savings and show them the money is in there.? Lenders want to know where the money came from because if you borrowed the money for the down payment, that payment too must be calculated into the debt to income ratio.
There can be other significant expenses when purchasing a home; you hear buyers and sellers talking about them all the time, closing costs.? The difference between purchasing a home and refinancing one when it comes to closing costs is that most of these costs can be financed and rolled into the refinance loan, on a Connecticut mortgage purchase loan you will usually be required to have cash to pay the closing costs and settlement fees.? Closing costs can vary and as a rule plan on having at least a minimum of 3%.? You can ask your lender about the possibility of including these costs (or at least some of them) in your purchase loan, or asking the seller to pay your closing fees or a portion of them is another option.? Asking won?t hurt your situation all they can say is no, then at least you will know what you absolutely have to come up with by the closing date.
Keep in mind there are an abundant of Connecticut mortgage choices out there for consideration, depending on what your individuals needs are and if you are refinancing, buying a home or investing in a rental or income property.? Knowing your choices will help ensure you get the best mortgage possible for your situation.
The most common Connecticut mortgage is a fixed rate mortgage, these can give peace of mind knowing the rate and term will never change or increase.? A variable rate mortgage (also called an adjustable rate mortgage or ARM) has an initial fixed rate period but is subject to change afterwards, the rate change depends on the current market condition since obtaining the loan; the rate can increase or decrease.? Balloon mortgages have a fixed rate but unlike a traditional fixed rate Connecticut mortgage it will have a specific date that the balance must be paid off or refinanced.? Balloon mortgages are an alternative to a traditional fixed rate or variable rate Connecticut mortgage.? These loans are attractive to some borrowers because the loan is still amortized over 30 years like a traditional fixed mortgage keeping the payment low, and unlike adjustable rate mortgages the rate is not subject to change.? The downside to both variable and balloon mortgages is that you need to maintain the same criteria used to initially qualify for the loan or you may find it difficult to refinance off of them.? Changing careers, a decline in income or a drop in crediting rating can make refinancing this type Connecticut mortgage more difficult.
