Why You Should Ask A Help From Mortgage Broker In Texas Pt 2

Top 5 Reasons To Use A Texas Mortgage Broker Right Now

Part 2

2. Ability To Locate The Most Advantageous Rates

Mortgage brokers generally have the ability to access upwards of 3o individual lenders when searching on a client’s behalf. These run the gamut of rates and terms, and brokers can carefully assess what is available and match loan programs to a borrower’s distinct situation. The end result may savings that run into the thousands or more over the length of the loan. Brokers are also privy to exclusive loan programs that buyers may not be able to access on their own.

3. Simplifying The Process

The mortgage industry has experienced a good bit of upheaval during the pandemic, and there is a lot of conflicting information circulating everywhere. This can lead prospective borrowers to feel overwhelmed and confused, something which may prompt them to scuttle their loan plans entirely.

Mortgage brokers have the knowledge and up-to-date insights needed to streamline the process and provide the latest details on available loan programs. This is a godsend for borrowers who might otherwise be discouraged from continuing their search for the right mortgage product.

4. Customized Loan Recommendations

Brokers have a legal obligation to work in the interest of their clients instead of that of the lenders with which they engage. The best brokers are those who work collaboratively with borrowers to learn about their situation, their needs, and their goals to come up with the very best solution.

A seasoned mortgage broker will offer a range of options and information all meant to aid in the making of truly informed decisions. These skilled professionals can also work with borrowers who are in need of refinancing options or even loan repayment forbearances.

5. Streamlining The Application

There is no doubt that purchasing a home is a thrilling prospect, but it does not come without significant stress. Juggling all of the documentation requirements, inspection details, interest rate considerations, and more can make even the calmest person start to worry, and that does not even address the strain that packing, buying furniture, and establishing utility service entails.

However, a top-notch mortgage broker can help shoulder the burden in a way that makes a massive difference. These professionals undertake all of the research duties related to your home loan, determine how much you are qualified to borrow, and manage the application process all the way through to completion. This is a significant thing for those who are already taxed by the logistical planning that moving inevitably involves.

By taking the time to find a reputable mortgage broker that you can trust, you can save yourself many of the headaches you would surely face by trying to go it alone. Align with a seasoned, skilled mortgage broker to aid in your home loan search, and lighten your load today.

Feel free to contact or call us to speak with our mortgage professional for any help you need with your home loan application. We hope to work with you soon! Click here to go to the first article in this series.

Why You Should Ask A Help From Mortgage Broker In Texas Pt 1

Top 5 Reasons To Use A Texas Mortgage Broker Right Now

Part 1

Those seeking to purchase or refinance a home understand that there are seemingly countless lenders available on the market from which to choose. Selecting the best from a very crowded field can make all the difference in terms of the interest rate and loan specifics that will ultimately apply. This is especially true amid the pandemic when information and policies seem to be changing all the time.

Mortgage brokers are highly-skilled professionals who can assist borrowers in navigating the market’s intricacies, with the overall goal of steering them toward the home loan that truly meets their needs and provides real financial value. Continue reading to learn more about the duties of a mortgage broker and why they are an indispensable part of the home buying or refinancing process.

What Mortgage Brokers Do

Mortgage brokers effectively serve as a middleman, standing between borrowers and lenders throughout their home buying or refinancing journey. If you are looking to borrow, a broker will represent you in the search for lenders willing to provide you with the most competitive interest rate and loan terms. They also serve as facilitators for the entire mortgage process, from initial application to closing.

Key Mortgage Broker Tasks

Because a mortgage broker understands the ins and outs of the loan process, they can provide the guidance borrowers need at every step along the way. Skilled brokers take the time to understand your objectives and your specific financial circumstances. They will explain the various loan programs for which you may be eligible and outline the cost involved with them. Brokers also handle the application process and see you through every phase until your deal actually closes.

Cost Of Mortgage Broker Services

The services of a mortgage broker are ultimately covered by lenders, rather than the home loan borrower. Brokers will receive commissions for suggesting a particular loan product when it is selected and received by an applicant. As such, borrowers don’t usually pay anything for the broker’s services.

It should be noted, though, that there are certain situations in which a broker fee will be charged to the purchaser. This amount may be in place of, or even in addition to, commissions paid by the lender.

Key Reasons To Employ Mortgage Brokers

1. Familiarity With Changing Lender Requirements

The coronavirus pandemic has caused numerous home lenders to change policies with alarming frequency. A number of lenders have altered eligibility requirements, documentation rules, and more. Submitting an application directly to a lender while unaware of recent changes can cause the approval process to be delayed or scuttled altogether. Brokers, however, remain fully apprised of any and all such changes, making it easy for them to adjust your applications on the fly, something that can increase your chances of success.

Feel free to contact or call us to speak with our mortgage professional for any help you need with your home loan application. We hope to work with you soon! Click here to go to the next article in this series.

 

Important Things To Understand When Applying For A Texas Home Loan Pt 2

Top 6 Things To Know Before Taking A Home Loan In Texas

Part 2

3. The Small Details In The Loan Contract Matter

An agreement for a home loan is a legal contract like any other and the legal terminologies can easily cause perplexity to the borrower especially the small “hidden” details in the agreement.

For instance, one may think a loan “default” implies a situation when the borrower is incapable of servicing by payment of EMI. To some banks, the interpretation for default may mean when a borrower dies, goes through a divorce (and the spouse was a co-applicant in the home loan), or when the borrower is sued for a civil or criminal case may be tax fraud.

It is also common to find clauses requiring the borrower to attach extra property for loan security in the event the price of the original property falls. In this case, the bank may adjudge the act of omission to provide extra collateral as a default.

4. Negotiate For A Favorable Rate

You must try to negotiate for a more favorable interest rate on the loan regardless of the loan type you have applied for as the borrower. In most cases, the bank holds the upper hand in the negotiations but a borrower can always bargain for lower rates especially if they have a long-standing relationship with the lender or a strong credit rating.

It is key that you have a clean record of timely loan repayment to support your credit history and request for favorable loan rates. Most banks are appreciative of a strong credit rating/history because a strong credit rating supports their quest for a good lending business.

Additionally, it might prove helpful if you can try to secure the loan at the end of a month when banks are racing to hit monthly targets for growth and expansion of loan portfolios.

5. Long Loan Repayment Durations Mean Expensive Loans

The Reserve Bank of India has been aggressive in enforcing the monetary policy for a considerable time now. An increase in the base lending rate has pushed banks to increase the interest rates charged to their customers on home loans and which implies a higher EMI for the borrower.

Many borrowers are unable to meet the EMI and appeal to the lender for an extension on the loan repayment duration in an attempt to lower the EMI. This is a move that creates temporary relief for the borrower who is in the desperate situation. However, in the long run, the borrower ends up paying more money.

As an illustration, consider a situation where the borrower has taken a loan of Rs 30 lakh to be repaid after 20 years at a rate of 10.5% per annum. In this case, the EMI to be paid is calculated at Rs 29,951 while the total interest to be paid on the loan will end up at Rs 41,88,240.

For a home loan with a long repayment tenure, the borrower ends up paying an interest amount that is higher than the principal amount borrowed.

6. Explore Alternative Lenders

Just because you have secured a loan with a given lender does not mean you are stuck with the lender for the duration of the loan tenure.

If you can source a lender with better financing terms than the original lender, you can always change lenders through available refinancing methods. Currently, most banks have removed pre-payment penalties on floating rate loans and only seek a processing fee from the borrower to effect the change.

As a borrower, always try negotiating for lower rates by seeking a reduction or a full waiver based on a study of comparable home loan products in the market.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the first article in this series.

Important Things To Understand When Applying For A Texas Home Loan Pt 1

Top 6 Things To Know Before Taking A Home Loan In Texas

Part 1

The process of taking on a loan is a bit more complex than many people think. From advertisements, it seems like many banks are always ready to give out as many loans as possible which contradicts the dreary process one must go through to have a loan approved.

Loans, like other financial investments, require the holder to be well conversant with how a loan product works to avoid getting into financial ruins later.

The following are the important factors to be aware of before getting into a loan contract with your financial institution.

1. Determinants Of Loan Eligibility

One of the most informal ways of qualifying a borrower for a loan is to compute their Equated Monthly Installment (EMI). Often, banks will require you to part with 40 to 50% of your monthly salary which will be directed to pay the loan. Noteworthy, reimbursements and allowances are not considered part of your salary used to net the EMI.

Additionally, your EMI will be negatively affected if the loan holder is servicing another debt elsewhere using their salary stream. In other situations, banks are keen on the number of dependents under the borrower. If more money from the applicant’s salary must be diverted to other important needs, the implication is a lower loan repayment capability.

Aside from the level of income after expenses, the reliability of borrower’s income stream is also questioned. Those borrowers with a more stable income are likely to find the eligibility criteria easier compared to borrowers in self-employment with unsteady income flow.

How old are you will influence the duration of the loan repayment period. Under normal scenarios, loan repayment tenures will not exceed the retirement age unless the borrower has a younger loan co-applicant.

Also, the co-applicant cannot be minor and should have achieved a given number of years for the application process to be successful, – a law that was set up to minimize ownership disputes. A co-applicant can enable the one to get a higher loan amount if the income level of the co-applicant is considered in the eligibility test.

The value of the property also affects the success of a loan application process. Most banks will not lend more than 70-80% of the value of the property to the borrower.

2. The Type Of Loan The Borrower Seeks

The type of interest rating categorizes home loans between loans with a fixed interest rate throughout the loan repayment duration or loans with a floating interest rate that varies from time to time depending on the market conditions.

Just as the name may suggest, for a fixed interest rate loan the interest charged on the loan does not change with fluctuations in the money markets. However, the interest rate on this loan is usually 1-2.5% points above the contract interest rate on a floating interest rate loan.

The clause to add extra percentage points on interest rating for a fixed-rate loan will vary from bank to bank.
The important thing to remember is that the EMI will be affected by the amount of interest charged on the loan. A higher interest rate will increase the number of periodic loan instalments required to be paid to retire the loan.

At face value, fixed-rate interest rate loans may seem a more viable financing option until you speak to a loan expert. When interest rates in the money market fall, the borrower is stuck paying a loan above the interest rates; the borrower’s existing home loan proves quite expensive in the long run when interest rates fall.

In such a fixed-rate loan case where interest rates fall, a borrower is legally required to pay an equal amount of interest charges all the time regardless of the level at which the interest rates in the money markets are prevailing at.

Additionally, it is common for banks to insist on adding an interest rates review clause in the loan contract where the bank exploits avenues to raise the interest rate on the home loan after a fixed period or a drastic rise in interest rates.

On the other hand, floating rates are more preferred unless the borrower (with the help of a loan’s expert) can rationally foresee a big increase in interest rates in the market over the loan tenure.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

A Helpful Guide For A Texas FHA Loan Qualifications

8 Things You Need To Know To Qualify For A FHA Loan In Texas

Part 2

6. Choosing The Right Type Of FHA Loan

Different types of FHA loans are offered by lenders and the most common type remains 30 years fixed interest loan. There is also the option of an FHA loan with a fixed interest rate for a period of 10 to 25 years and you also have the option of an adjustable-rate FHA loan. With an adjustable-rate FHA loan, you will benefit from fluctuating interest rates at particular time periods.

For instance, a 3/1 adjustable rate FHA loan allows a fixed interest rate for the first 3 years but the interest rate is reset every year after that. You can get an adjustable loan with different periods of a fixed-rate term such as 3/1, 5/1, 7/1, or 10/1 with the 30-year loan. However, the FHA loans with fixed interest rates are more popular as adjustable-rate loans are deemed riskier by buyers.

7. Understanding FHA Loan Costs

An FHA loan also comes with the mandatory cost of private mortgage insurance. It is the insurance that protects the lender in case the borrower defaults and as a borrower, you need to pay an upfront fee as well as a monthly fee. It is essential for everyone who opts for less than a 20% down payment.

8. Starting The Application Process

If you have checked everything and you think you will qualify for an FHA loan, and it is now time for you to apply, you should first try to get pre-approved with your chosen lender. It could be a credit union or local bank or an online mortgage lender or an independent mortgage broker.

Start the process with multiple lenders and ask for quotes for payments, fees as well as rates. Keep in mind that there is huge competition in the mortgage lending business even with an FHA loan, and even a slight difference in the closing costs or interest rates can help you save thousands of dollars.

Mortgage Lending Texas

Here at Mortgage Lending Texas, our team has mortgage professionals all over Texas. We are dedicated to helping our clients get the highest quality service for all their mortgage needs. We are committed to get our clients the lowest rates and to help them choose the best from multiple loan programs in The Woodlands, Tomball, San Antonio, Spring, Houston, Austin, and Dallas, Texas.

Our team of mortgage professionals has multiple years of experience and we will work with you to make sure that you get a customized home loan that is exactly right for your situation and meets your expectations. Whether you are buying your first home or buying your dream home or refinancing a loan or consolidating debt, our team of highly experienced loan officers will make sure you are able to find the right loan at the lowest possible rate.

We strive to create a lasting relationship with our clients to allow us to serve our clients for many years in the future. We are different from other mortgage companies that operate nationwide. We promise that all your information will always be safe and private. We have a well-earned reputation in the lending community for trustworthiness and reliability.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the first article in this series.

A Helpful Guide For A Texas FHA Loan Qualifications

8 Things You Need To Know To Qualify For A FHA Loan In Texas

Part 1

With the help of FHA loans, you can now fulfill your dream of owning a house with a low payment or limited credit. Here is what you need to know about qualifying for an FHA loan and things you can expect.

The FHA loan program allows you to buy a home with just 3.5% of the property value as a down payment even when you have a credit score that is lower than as required by traditional mortgage providers.

It is also important to understand that the FHA loan program is not limited to low-income applicants or first-time homebuyers. Here is what you need to know about FHA loan qualifications.

1. Verifiable Income

One of the biggest factors that affect your qualification for an FHA loan is your ability to repay the loan. Here is a rough criterion you need to meet in terms of income:

The mortgage payment should be below 35% of your income before taxes and all your monthly debt payments including your mortgage, credit cards, car loan, or any other loan should be within 48% of your income.

If all these things sound confusing, feel free to use our home affordability calculator to figure out the maximum amount you can afford to spend on a home. If your dream property costs more than what you can afford now, you should try to pay off as much debt as possible before applying for an FHA loan.

2. Down Payment – 3.5%

The minimum down payment you need to make for an FHA loan stands at 3.5%. However, it is close to 6% of the purchase price of the home in reality as you also need to pay the closing costs. This closing cost also includes the upfront mortgage insurance premium which is equivalent to 1.75% of your home’s value. You can bring this insurance premium down to 1.25% when you undergo an FHA approved credit counseling program before you close the deal.

3. Credit History

Established credit history is a must and you need to have at least 2 lines of credit such as a credit card and a student loan in order to qualify for an FHA loan.

4. FICO Score Range 580 to 640

The minimum FICO score you need for qualifying for an FHA loan program is 580. However, you should know that FHA is not the lender but it acts as an insurer and the minimum credit score requirements are set by the lender. This minimum score is often around 640 when it comes to FHA loans. Keep in mind that conventional mortgages usually require a FICO score of around 700.

You can check your credit score for free if you don’t already know it. If your score is above 640, is completely safe to apply for an FHA loan. If your credit score is below this limit, get in touch with the chosen mortgage lender and inquire about their minimum scores to process FHA loan applications. Keep in mind that you should do all this before making an official application.

5. Remain Within FHA Loan Limits

You cannot borrow as much as you want with an FHA loan as there are federally set limits that depend on your state and county. However, in most cases, the limits aren’t low enough to prevent you from buying a home that is expensive.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the next article in this series.

Applying For Mortgage In Texas? Here Are The Pre-approval Requirements

5 Necessities For Texas Mortgage Pre-Approval

Part 2

3. Good Credit

For Conventional Loans and some Federal Housing Administration loans, a 620 or more FICO score is needed by most lenders before approval can begin. 760 or higher credit scores will usually result in customers getting lower interest rates from lenders. According to FHA guidelines, a borrower can pay as low as 3.5% down if their score is 580 or more.

new San Antonio home bought with an FHA mortgage loan moderate incomeA larger down payment is required of borrowers with lower scores. Borrowers with low scores can often get assistance from lenders and can get score improvement suggestions.

A payment of $1,288 each month would be required for a $250,000 loan and a FICO score in the range of 620-639. $1,062 would be paid by a homeowner who has a score in the range of 760–850. The difference between these two each year is $2,712. The rates that are offered today would give a buyer a score in the range of 620-639 an interest payment of $213,857 and $132,216 for the 760-860 range buyer. This presents an $81,000 difference.

4. Verification of Employment

Borrowers will need to be able to show lenders that they have a stable job before they can be approved. The buyer’s employer will likely be called to verify that they actually work for them and provide them with a salary. Previous employers may be contacted if any job changes were done recently.

When a buyer is self-employed, there is a lot more paperwork needed to verify the income and business of the buyer. Stability of the income of the borrower, the nature and location of the business the borrower has, any demand for the business’ services or products, the business’ financial strength, and the business’ ability to generate income are all factors that will be considered when self-employed borrowers try to get approval for a loan.

Recent tax returns from the past two years and the right schedules will need to be provided by self-employed borrowers.

5. Other Documentation

A credit report must be allowed by the lender for mortgages, along with the signature and Social Security number of the borrower and a copy of the driver’s license of the borrower. Additional paperwork may be needed by the lender, and you will need to have these documents ready to provide them to the lender.

The mortgage process will be easier if you can cooperate.

You will have an easier time buying a home if you talk to a lender before making any decisions. Before you head for a pre-approval appointment, get your paperwork ready and don’t hunt for houses until you get pre-approved.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the first article in this series.

Applying For Mortgage In Texas? Here Are The Pre-approval Requirements

5 Necessities For Texas Mortgage Pre-Approval

Part 1

While there may be some excitement in looking for a home to buy, anyone who really wants to buy will delay the open house visit and start at the lender’s office. Pre-approval letters are expected by most sellers, and a buyer having one will show an ability to get financing, giving them a better chance of negotiation.

There are five things that buyers need – employment verification, good credit, proof of income and assets, and some important documents for a mortgage pre-approval.

Pre-approval vs. Pre-qualification

A pre-approval has more value than a mortgage pre-qualification, but pre-qualifications have their use in showing the amount a buyer can afford to spend. Under the pre-approval, both documentation has been verified and the buyer’s credit has been check by the lender. Positive checks will result in a loan amount being approved for 60 to 90 days.

Talking with a lender and getting a letter of pre-approval gives many benefits to potential buyers. Budgeting and loan options can be discussed with the lender after pre-approval. Any problems with the buyer’s credit will be found when the lender checks for them. The price range will also be set and the home buyer will figure out their maximum borrow amount.

After an appraisal is done for the buyer and the property has a load applied to it, the final loan approval will be done.

Pre-approval Requirements

Good credit, employment verification, proof of income and assets, and more documents are needed by a lender in order to get mortgage pre-approval. Here you’ll find more information about how to obtain the necessary things to be pre-approved for mortgages:

1. Proof of Income

Year to date income and recent pay stubs indicating income, W-2 wage statements given through the most recent two years, bonuses or alimony, and tax returns from the most recent two years are needed by buyers to prove their income.

2. Proof of Assets

In order to show that they have down payment money, cash reserves, and money for closing costs, the borrower will have to provide investment account statements and bank statements.

Depending on the loan, the down payment, which is a percentage determined by the selling price, can be different. Unless 20% of the home’s purchase price is being put down, the buyer will have to either pay a funding fee or mortgage insurance premium or pay for PMI or private mortgage insurance, as required by the loan. Depending on the loan that is being pursued, other factors, such as the FICO credit score of the buyer and DTI or debt-to-income ratio, will be needed along with the down payment for pre-approval.

Loans conform to enterprise guidelines that are government-sponsored, with one exception in the form of jumbo loans. First-time buyers and buyers with low or moderate-income are perfect for Home Possible and HomeReady loans, which are provided by Freddie Mac and Fannie Mae respectively.

U.S. veterans, spouses that aren’t remarried, and service members can get VA or Veterans Affairs loans. No money down is required with these loans. In order to prove that certain funds aren’t loans, a gift letter may be needed if a buyer obtains assistance money for the down payment from a relative or friend.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

How To Become Eligible For A Texas USDA Loan

Applying For A USDA Loan In Texas? Here’s A Perfect Guide For You

Part 2

Income Limits For USDA Loans

For the loan guarantee, a maximum adjusted annual income amount is set by the USDA. This is a limit to prevent anyone outside of the low to the moderate-income bracket from being a recipient of the loan.

historic Fort Worth home bought with an FHA mortgage loan moderate incomeThe following income limits are set by the USDA:

  • A household with 1-4 members: $90,300
  • A household with 5-8 members: $119,200

There are regional differences that must be accounted for, and the USDA deals with these differences by using household sizes and locations to make limited variations. 115% of the median household income of an area is the base limit that the USDA sets on income. To determine if you’re eligible, they’ll compare the regional median to your qualifying income.

USDA Repayment Income

For the USDA, repayment income and qualifying income carry huge differences. Repayment income shows the ability of a borrower to pay back the loan, which is different from the ability for income requirements to be met by borrowers.

A DTI, or debt to income ratio is used by lenders to figure out just how creditworthy an applicant really is at the time of the application process. USDA loans have a 41% DTI standard. This means that 41% is the maximum amount of a monthly income that can be spent on debts by a borrower.

Although 41% is the standard, a USDA loan can be obtained with a higher DTI. The lending requirements will generally be tougher when applying with a DTI higher than 41%. Each lender has their own guidelines related to this.

Location Requirements For USDA Loans

Homes in rural areas are where USDA loans are intended to be used. The term rural can encompass many locations, and suburbs can often fit the USDA’s definition in many cases.

An open country that is away from an urban area is considered to be a rural area by the USDA. Depending on the area, a maximum population of 35,000 may be required for the designation of rural.

Nearly all of the land available in the U.S is eligible to receive a loan for rural development because of the USDA definition, with 100 million people living across the land.

Any income producing property can’t be purchased with the help of a USDA loan. There is a loophole to this, as properties that aren’t being used for commercial purposes anymore can still be purchased. This includes silos, barns, livestock facilities, and greenhouses.

Properties that can also be eligible:

  • Newly constructed properties
  • Modular and manufactured homes
  • Townhouses and condos
  • Homes that have been foreclosed and subjected to short sales

Thousands of people have benefited from the loan program available from the USDA, and for anyone who wants to become a homeowner, it stands as one of the top options.

In The State Of Texas, Get Your USDA Loan By Going With Mortgage Lending Texas

We want to give our clients the best service possible and building a foundation with them that will last for years. We will use the utmost security with your information and keep it private, which is more than other companies can say. We are a leading company that many people trust.

Use the tools on our website or call us to speak with a mortgage professional that has the necessary experience to guide you. We can’t wait to work with you.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the first article in this series.

How To Become Eligible For A Texas USDA Loan

Applying For A USDA Loan In Texas? Here’s A Perfect Guide For You

Part 1

Anyone who applies for a USDA loan must meet the USDA’s requirements for eligibility. Income, home location, credit, and property usage are all taken into account for eligibility.

The USDA wants to give families with low and moderate incomes clean and safe housing, and these facts are important in making this possible.

USDA Loan Minimum Requirements

Dallas texas brick home bought with assistance paymentsThe USDA requires that these minimum guidelines are followed:

  • Have permanent residence or U.S citizenship
  • Have a credit score that is at least 640 or some way to prove that you’re creditworthy
  • Income that is dependable and stable
  • Mortgage payments for 12 months without being late or any collections taken
  • Less than or equal to 115% of the median income of an area for the adjusted household income
  • The location of the property must be in a rural area that qualifies, and it must be the primary residence

The Rural Development program from the USDA isn’t the only one to have requirements, the lender can have its own set that must be met.

Credit Requirements For USDA Loans

A proper credit history that shows that an applicant can actually pay the loan back, and a steady income are things that an applicant must have.

The USDA loan doesn’t require a specific minimum credit, but applicants can use the automated underwriting system if they have a credit score of at least 640. Those with a score lower than 640 can still apply for the loan but have to deal with more strict guidelines because they must use the manual underwriting option.

The following will be reviewed by a lender to determine your creditworthiness:

  • Patters of repayment
  • Your credit history length
  • Your credit score
  • How your credit is utilized

If an applicant doesn’t have credit, they can still be eligible for the loan, but in order to verify them, the lenders may enact their own policies. They may check insurance payments, utility payments, rent payments, and other sources for credit verification.

Income Requirements For USDA Loans

To determine whether a borrower has the right income for a loan, the USDA uses four calculations that are unique:

  1. Household Income on an Annual Basis
  2. Adjusted Household Income on an Annual Basis
  3. USDA Qualifying Income
  4. Repayment Income

Verifiable and stable income with no signs of stopping is the minimum of what is required of applicants by the USDA. Pay stubs and income taxes from as far back as two years are generally used to check the employment status and income of a person respectively.

The total of all income made by everyone in a home is considered the annual household income. The household limit includes all adults with income, even if they aren’t the loan applicants.

When acceptable deductions are subtracted from the annual income, the adjusted annual income is calculated. Whether a person meets the income restrictions of the loan program is determined by this figure.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the next article in this series.