- A mortgage lender wants three things from a potential customer.
- Credit rating is a key factor in making a loan decision.
- It never hurts to apply and see what lenders think of your situation.
BILL'S ANSWER
A mortgage lender wants three things from a potential customer:
- Steady income
- Relatively clean recent credit history
- Debt-to-income ratio of 35% or less.
New mortgage customers who qualify for a mortgage have all three of these qualities, plus a down-payment. Potential refinance customers who have all three of these qualities plus equity in their property will find refinance lenders lining up at their doors.
Credit rating is an important factor in making a loan decision. Given your default on your credit cards, which is most likely reported on your credit report, it will be more challenging to get approved for a loan, since your credit rating will be low. Additionally, if you are seeking a refinance loan, your debt-to-income ratio will be considered as well as other variables in the loan underwriting process.
Keep in mind, however, that if you have accumulated equity or have a sizable down payment, that could provide the cushion in an LTV (loan-to-value) calculation to get you approved. Most of all, it cannot hurt to apply and see what lenders think of your particular situation.
It may be more effective to speak to your lender about a home loan modification that could lower your interest rate and monthly mortgage payment.
If your credit is not the best and you are curious about your options, learn about bad credit mortgage refinancing and no-cost mortgage refinancing. Bills.com makes it easy to compare mortgage offers and different loan types. Visit the Mortgage Refinance Quote page to find a loan that meets your needs.
I hope this helps you make the right decision for your particular situation, but be sure to shop around and find a loan that meets your needs. Visit the mortgage resource page to learn more.
I hope this helped you to Find, Learn, & Save!
Best,
Bill
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