If you have been pre-approved for a loan then you will have a good idea what amount your can borrow based on your personal circumstances, not taking into account any appraisal of an actual property.
When they receive an application from you the underwriter at the company will look at various factors in making their decision. These factors include your full credit history, the value of the property, and the ratio of your debt to your level of income. By examining all of these the underwriter can ascertain how much of a risk the lender is taking by awarding you a home loan.
If I get a loan what will the interest be?
There are many details that are considered when a decision is being made on the applicable interest for a loan. Your credit history will again be taken into account as will your ability to repay the loan.
Consideration will also be made as to the value of the property and the amount of the loan which is being awarded.
How much money will I be able to get as a home loan?
Lenders are obviously not going to give you a loan that is more than you can afford to repay; they have to protect their investment. The underwriter will look at your debt to income ratio; in other words the amount you pay out for debts each month divided by your gross monthly income. They will also take into account any equity that you may have.
Firstly they will work out what you can afford to repay each month using the debt to income ratio, then they will factor in any equity to determine the overall amount you can afford to borrow.
What happens if my credit rating is not that good?
The effect that your credit rating will have really depends on how bad it is. Don’t forget that the decisions made by a loan company are based on the risks they are taking by lending; the greater the risk the less likely you are to get the home loan that you want.
This does not mean that your credit has to be perfect but you should be able to show that you are willing to make payments on time. In other words if you have had credit problems in the past you will benefit from having made some attempt to repair your credit and get back on track. You should remember though that credit is only one factor in the decision process as important as it is.
If you are awarded a home loan it is important that you understand, and comply with, any list of borrower’s conditions which need to be met so that when you need to close on a property you are good to go.
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