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Liberty Mortgage, Inc.
509 W. McKinley Avenue
Mishawaka, Indiana 46545
Telephone 257-0629
or 888-568-1786
Fax 574-257-0632
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What's Considered for Loan Approval
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The Basics
Obtaining an affordable mortgage depends not only on what you feel you can afford,
but more importantly, on what a lending institution says you can afford. Before lenders will issue a
commitment to lend large sums of money, they must be assured that you can afford to repay the loan and
that the value of the property is sufficient collateral to guarantee repayment of the loan in case of
default.
You may have already noticed there is much more to the loan process than selecting an
interest rate. Our sincere desire at Liberty Mortgage, Inc. is to guide you through the process and relieve
and anxiety you may be feeling. In order to be considered for a mortgage, we look at five distinct areas
of your finances and the property.
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Assets
We must first determine the amount of cash that you have available for a down payment
and closing costs. There are guidelines that govern the allowable sources of funds for the down payment
and closing costs and documentation required to verify these funds.
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Income
We need to determine how much income is available to qualify for the loan, where it
is coming from, and how long it is likely to continue. All income used to qualify for the mortgage loan
must be verifiable. Your gross monthly income, coupled with your monthly debt obligations, are used to
determine the ratios for approval of your loan. Length, type and stability of employment are also key
factors to consider.
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Credit
As lenders, we will look at your credit report and any other credit references to determine
how much credit you have been extended, what types of credit are available to you, how timely the payments
have been made and how much your total monthly obligations are.
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Liabilities
It is necessary to make sure that a borrower's obligations don't exceed acceptable
ratios for both the monthly housing payment and the toal of all monthly debts. The ratios consist of
a housing ratio and a total monthly debt ratio. The housing ratio is calculated by comparing the proposed
principal, interest, taxes and insurance (PITI) payment on the loan for which you are applying to your
gross monthly income. Similarly, the total monthly debt ratio is calculated by comparing the total of
all your monthly obligations including PITI, credit card payments and installment loans with your gross
monthly income.
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Equity
The final piece to the mortgage puzzle is the difference between the loan amount and
value of the property. A property appraisal is conducted to determine the value. Appraisers are licensed
by the state and base their determination of value on the prevailing market.
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More about the loan process . . . .
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