If you are looking at Escondido real estate or considering buying a home in Escondido, Calif. and beyond, then chances are that you will be seeking a mortgage loan for your next home purchase. There are so many different programs available for Escondido home loans that it is often hard for the homebuyer to wrap his or her head around all of the different ways that homes can be financed at this time.
When obtaining a mortgage to purchase a home in Escondido, the mortgage lender will be considering many factors in order to determine the borrowers’ creditworthiness. These factors may include credit score, credit history, debt-to-income ratio, assets, income, and employment history.
Your credit score is a numerical expression of your creditworthiness based on a statistical analysis of your credit files. The score is based on a number of factors including whether you pay your debts on time and how much you owe creditors. A strong score may be a number above or around 750. But, don’t despair if your score is lower than that; financing is available for borrowers with a wide range of credit scores.
Another factor that is reviewed when you are obtaining a home loan in Escondido is your credit history. When lenders have a look at your credit history, this means that they will investigate whether you have made late payments in the past. They will use this information to help determine your creditworthiness. Collection accounts, tax liens, bankruptcies and judgments will also impact your creditworthiness.
A third important factor that a lender will consider is your debt-to-income ratio. Do you have a high credit card balance? Do you have outstanding bills of other sorts? What percentage of your income is spent on your outstanding debt and how much will be available for your mortgage payments? These are items that are considered when a mortgage lender or loan officer is analyzing whether you will qualify for a home loan.
The final factor that is a large consideration when obtaining a home loan in Escondido is whether the borrower is employed and has assets (savings). Not only will the loan officer ask for pay stubs, but proof of steady employment and proof that he or she has been in the same line of work for at least the last two years, making the same, or higher, income. The amount of money you have available for a down payment is also taken into consideration.
Once the loan officer has looked at these factors he or she will send your documents to the underwriter who will determine your creditworthiness and approve or disapprove you for a mortgage loan. If you are approved you’ll also learn how much you can spend on your new Escondido home. This way it will be easier to search for Escondido real estate that meets your specific needs.
In addition to the factors noted above, when you obtain a home loan in Escondido, you will need to select from one of many different loan programs available. Here are some of the most common programs available when you are purchasing a home in Escondido:
Conventional Loans. A conventional loan is a generally obtained by strong borrowers but can currently be obtained by those borrowers making a down payment of as little as 5 percent of the purchase price.
FHA Loans. FHA stands for Federal Housing Administration and refers to a type of government-guaranteed loan where borrowers can make a down payment of as little as 3.5 percent, if they qualify This loan is not just for first-time homebuyers and has more flexible underwriting guidelines and debt-to-income ratio guidelines than a conventional loan.
Another type of FHA loan is the 203K. The 203K is a rehabilitation loan where the amount financed includes an additional amount that the borrower will use to make repairs to the home.
VA Loans. The Department of Veterans Affairs offers this great program to eligible veterans. Borrowers using this program will have no monthly mortgage insurance, but may be able to buy a property with as little as $0 down to $477,000 in San Diego County.
As you can see, there’s lots to know when you are considering purchasing a home in Escondido and when speaking with a lender about a home loan. Understanding what the lender needs and the loan programs available will go a long way toward a home purchase in Escondido and beyond.
Written by Melissa Zavala