The lender then compares the borrowers’ current housing costs to the costs they will face if the loan is accepted. Principal, interest, fees, and insurance, as well as any assessments or homeowner association dues, are all included in the proposed housing cost sum (such as in a condominium or town homes). Some mortgage lenders include the expense of electricity in this calculation.A monthly housing cost is calculated and compared to gross monthly income. Monthly housing expenses (PITI) do not exceed 25% to 30% of gross monthly income, according to a general rule of thumb.Checkout Kansas City Mortgage Lenders for more info.
Another rule of thumb is that overall fixed monthly expenditures do not exceed 33% to 38% of income. Housing payments plus automobile payments, instalment loan payments, alimony, child care, and assets with negative cash flows are all examples of this. These are general guidelines, but mortgage lenders understand that the applicants’ income must also cover food, health care, clothing, transportation, entertainment, and income taxes.
The lender is interested in the applicants’ sources of closing funds and whether, if the loan is approved, they have assets to fall back on in the event of a reduction in income (a work loss) or unforeseen expenditures such as hospital bills. The portion of those properties that are in cash or can be converted into cash in a matter of days is of special interest. This are referred to as liquid assets. If income falls, they are much more useful in meeting living expenses and mortgage loan payments than illiquid assets, which can take months to sell and turn to cash.
For life insurance policyholders, a mortgage lender recognises two principles. The cash value of a policy is the amount of money a policyholder would earn if he surrendered it or the amount, he might borrow against it if he took out a loan against it. The face amount is the sum that will be paid out if the insured died. Mortgage lenders are more at ease if the policy’s face value is equal to or greater than the amount of the proposed home loan.
CONTACT INFO :
Metropolitan Mortgage Corporation
7280 NW 87th Terrace Suite 200, Kansas City, MO 64153
Phone No. : 855-313-2480