The C-E-D Factors of Applying for Mortgage Loans
In war, the general won’t risk sending in his troops without knowing first what he’s up against. It’s no different from applying for home loans: lenders want to know you better prior to making a decision. If you got turned down in applying for a home loan, one, more, or all of the C-E-D may be at fault.
The C-E-D stands for the three things that have a heavy pull on applying for a home loan: credit, employment, and down payment. The credit shows how diligent you are in fulfilling your money issues; the employment shows whether or not you’re capable of paying; and the down payment gauges the risk factor. It’s quite a good combo if you’ll look at it. It pays to know, therefore, why the lender showed you the thumb down.
Credit: The credit score dictates how well you pay your debts and other financial obligations to the bank or lenders. Home loan experts say a person needs at least a score of 720 to qualify for loans other than the ones issued by the government. If you have a low credit score, it’s best to patch up that problem first before proceeding any further.
Credit scores at the subprime level (620 to 659 points) can get you a mid-level mortgage, but it tends to have high interest rates. Since lenders will have to keep people with low credit in check, the interest rates rise the lower the credit scores go. Keep your score at prime level or above for a lower interest rate.
Employment: Many lenders take a look at your employment history to determine if you have the capability to pay Utah home loans. They want to see that you’ve been working with a firm for at least two years or more—and you can’t change jobs during the period of the loan. If you do, the loan on your home can be revoked. You may not love your work; but think of it as a means to get your dream home and it’s bound to look more appealing.
Down payment: A down payment is a part of the property you pay in cash to ease your home loan. While it’s no longer required to “put 20 percent down” or pay 20 percent of the property in cash, doing so can make a good impression. Various Utah mortgage loans have different rates depending on the down payment you shelled out.
For more information on other things that can seriously affect your application for Utah home loans, visit the website at banking.about.com. Understand the C-E-D of mortgage application, tread lightly on your chosen plan, and live the dream.
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