The lender also has an interest in the property’s future use. Mortgage lenders feel most comfortable when a home loan is already occupied by the loan borrower for the purchase or renovation of a house. This is because owner-occupants typically have pride of ownership in keeping their properties and they will continue to make monthly payments even under bad economic conditions. An owner-occupant also knows they will have to vacate and pay for shelter elsewhere if he / she ceases paying.Do you want to learn more? Visit Bridgepoint Funding, Inc. va loan.
If the borrower for the home loan wants to buy a dwelling to rent out as a property, the lender will be more careful. This is because the property may not generate enough revenue during periods of high vacancy to cover the loan payments. A strapped-for-cash borrower would likely default at that point. Notice also that borrowers generally avoid purely speculative real estate loans. If the property’s value fall below the amount owed, the creditor may no longer see any sense in making the loan payments.
Finally the mortgage lender assesses the disposition of the borrower towards the proposed loan. A casual attitude, such as “I’m buying because real estate is always rising,” or an individual who doesn’t seem to grasp his undertaking responsibility will carry low ratings here. The applicant for home loans, who displays a mature attitude and appreciation of the mortgage loan duty and who shows a strong and reasonable desire for ownership, is far more welcome.
The Borrower Analysis The next step is the mortgage lender to start the borrower’s analysis, and the co-borrower if there is one. In the decision of the lender to lend or not to lend, age, sex and marital status once played an important role. The young and the old often had trouble getting home loans, as did the single, divorced, or widowed women and individuals. The Federal Equal Credit Opportunity Act today forbids discrimination on the basis of age, gender, race and marital status. Mortgage lenders are no longer allowed to disregard women’s earned income even if it comes from part-time jobs, or because the woman is child-bearing. Alimony, independent insurance, and child support must be counted in full from the home applicant’s decision to report it. Young adults and single individuals can not be dismissed because the lender thinks that they have not “put down roots.” Seniors can not be dismissed as long as life expectancy reaches the loan’s early risk span and collateral is sufficient. In other words, the focus of borrower research is now on job stability, earnings adequacy, net worth and credit rating.
Mortgage lenders will ask questions about how long the applicants themselves have kept their current jobs and the quality of those jobs. The lender agrees that loan repayment will be a regular monthly obligation and wishes to make sure that borrowers have a regular monthly cash inflow in a large enough quantity to cover both the mortgage loan payment and their other living costs. Therefore, the optimal danger is perceived to be a candidate who possesses marketable job skills and has been regularly working with secure employer. Higher risk is posed by people whose income will rise and fall erratically, such as contracted salespersons. Persons whose skills (or lack of skills) or lack of seniority in jobs contribute to recurrent unemployment are more likely to have trouble repaying a home loan. The mortgage lender often inquires as to the amount of dependents from his or her income which the borrower will support. This information provides some insight as to how much of the monthly house payments will be left.