Home Buying in Louisville: Steps to Qualify for a Mortgage

According to the Greater Louisville Association of Realtors (GLAR), the percentage of houses sold till now (2012) has grown up by 15% and it was exceptionally high in the month of August at 26%. Around 8,504 houses were sold by them in August, which is the largest since 2007 when 10,513 houses were sold by them in that same year.

Local Realtors said that Louisville market is showing signs of recovery but is has to improve more in order to prevent the abuse of foreclosure.

However, due to the expected purchase of $40 billion of mortgage-backed securities every month by the Federal Reserve, rates of fixed rate mortgages dropped drastically. This made buying home affordable for the common people, especially the burgeoning middle class.

In spite of the financial sops from the central bank, heads of the Louisville Realtors association said in its home sales report that continued low mortgage rates may prevent people from buying new homes, subsequently sales will be low otherwise expected.

Though many people may opt to procrastinate in buying homes, yet there are many who would be buying homes but don’t know how to qualify for mortgage loans. So, they can follow the below mentioned guidelines that will help them to qualify for loans.

Steps to Qualify for a Mortgage

Home buyers have to meet the following criteria in order to qualify for the mortgage loans:

1. Credit score – Home buyers can check with the prominent websites in order to know about their credit score. People with a credit score of 740-760 will get the best rates, whereas people with a credit score of 600 or less will get fairly high rate of interest on their loans.
2. Mortgage Affordability – While taking out mortgage loans borrowers generally have to pay around 20% as down payment. Moreover, their debt-to-income ratio should not be more 36% of the monthly disposable income. There are also FHA or VA mortgages for people who want make lower down payments.
3. Employment History – In order to qualify for mortgage loans, borrowers have to oblige with their current and updated employment history in the application form. Lenders verify whether or not borrowers are financially strong enough to make the monthly payments. Moreover, they have to sign Internal Revenue Service Form 4506-T so as to authorize the lenders to check their tax papers with the revenue services department.
4. Personal Assets – Borrowers need to disclose whatever personal assets they have. For instance, they have to mention about their retirement funds, savings, checking accounts and investments like bonds, stocks, etc. in their application.

They should mention about any sort of financial obligations like child support and alimony while applying for mortgage loans. This will help them to qualify for mortgages easily.