It is likely that buying a property is part of your short-term plans, but you may be wondering, “Will I qualify for a mortgage loan?” You can perform a self-assessment before visiting our branches. Here’s how!
To qualify for a mortgage loan, some important factors that are taken into consideration are your ability to meet the monthly mortgage payment and your ability to meet your other debts.
One of the most important criteria in the processing and approval of a mortgage loan application, is verifiably demonstrating that you have the capacity to meet your monthly mortgage payment obligation. It is also important that you can demonstrate the ability to meet all other financial obligations, including the mortgage payment that you will have from the day your mortgage loan is closed.
To make that calculation, as a rule, a factor of 29% of your total income compared to your monthly mortgage payment is used. This first factor is called debt-to-income ratio. The second factor is based on considering all your other monthly obligations, plus the requested mortgage. This percentage should not exceed 43% of your total income. The percentages may vary depending on the mortgage product, the transaction, the loan-to-value ratio, and the loan amount, among others.
Make a list of all your monthly debts to perform this prequalification calculation. Now divide it by your actual monthly income, and you will obtain the percentage of your income that is already obligated. From there, you will know the available income to take a mortgage.
After making this calculation, you may realize that your income allows you to meet the monthly mortgage obligation. However, when calculating that second factor, your qualification parameter exceeds the maximum for approval.
What should you do then? One alternative could be paying off other types of debts, such as credit cards, personal loans, student loans, store accounts, etc. This will reduce your obligations and could help you qualify. Another alternative would be to find co-borrowers who, with their income, can increase the repayment capacity and help you qualify. You can also consider reducing the loan amount to lower the monthly mortgage payment.
To learn more about this topic and/or before starting your mortgage application process, at Oriental we are more than ready to guide and assist you. Click here or call us at 787.777.2272.
