Greetings From Jeremiah

My personal goal is to explain how some mortgage companies decide your fate when it comes time for a loan. Understanding this can help reduce a ton of stress while waiting on the "approval" - and also improve your chances of getting it done faster and a better loan rate.

When a lender considers a mortgage loan request, it is commonly referred in the mortgage industry as underwriting the loan. Underwriting is the process of checking all of the information in a loan application with all of the supporting documentation: pay-stubs, W-2's and so on. In general this "how" is known as the 3 C's of credit.

The 3 C's of credit comprise your entire financial life. . .
The first C is Character.

This is the measure of what kind of credit you've been extended in the past and more importantly whether or not you've paid back money in a timely fashion. Character is by far the most important of the three C's. The lender also ranks the importance of each of your existing and past debts when measuring capacity. The most important credit you can have is a mortgage, followed by installment loans, such as a car loan, revolving loans with a financial institution and then all other loans. A mortgage lender is primarily going to be concerned with whether or not you've made past mortgage payments on time, and then all other loans.

The second C is Capacity.

This is the ratio of how much income you have to debt. Debt is broken down into two categories. First, the mortgage loan size and resulting payments and second, all other debts and your resulting payments. In general, lenders allow mortgage borrowers to use between 28% and 35% of their gross-pretax income for mortgage payments and 33% to 45% for all debts including the mortgage.

The third C is Collateral.

This is where they look at the size of your down-payment in the event of a purchase. In the event of a refinance, it is the amount of equity you have in a home. In general, the larger the down-payment or the greater the equity the more attractive the rates and terms will be for you.

Visit Our Website: www.bullfrogmortgage.com

As a potential borrower, you should be careful when working with any mortgage professionals; should you want to discuss your particilar needs with me call me on my direct line listed below.