Posted by admin on June 18, 2011
To qualify for a low down payment loan you need to have:
• One should earn enough to support the mortgage payment
• Sufficient cash for the down payment of the loan
• One should be able to run the family’s cost easily
• One should have good credit score and has gain the faith of the lender
• One should also have the fund equal to three months mortgage payment
When the house is being legally transferred to you, you must be able to pay the entire settlement cost. The closing cost should be covered during this transaction, the closing cost could be around 3 to 4 percent, and however the cost may vary from place where you are residing.
What is closing cost? Closing cost is the origination of the loan fee. There are other cost like lawyer’s fee tax adjustment and mortgage insurance. If your down payment is less than 20 percent then there would be other charges as well, it would be explained to you by the mortgage agent. To get a better picture of what would be your final points or closing cost you may take the advice of the attorney that you have hired to purchase the house.
A vital piece of mortgage advice… You should have a capacity to afford the mortgage loan; however there are two formulas used in acquiring the amount of loan you can afford. They also determine that how much money you should spend on mortgage payment, they are called qualifying ratios.
The most important thing to remember is that the ratios may vary because each application is handled by different individuals. There are many program which can be affordable and are run by the private and government body with different guidelines for both the upper-class and the low income families.
To qualify for the conventional loan, the housing expenses should not cross 20% to 25% of your gross monthly income. To qualify for FHA loans the expenses should not cross more than 30% to 35% of gross monthly income.
Any expenses that extend 11 months or more into the future are termed long term debt such as a car loan. Total monthly costs including PITI and all other long term debt should equal no greater than 33% to 36% of your gross monthly income for conventional loans. Using the same example$2500 x 36% = $900. So the total of your monthly housing expenses plus any long term debts each month cannot exceed $900. For FHA the ratio is 41%.
Visit this link to know more about Low Down Payment Loan Qualification: http://www.pueblo.gsa.gov/cic_text/housing/low_down/low_down.htm