Today's blog post is written by guest author Tim Smith. Tim is a mortgage lender with more than 35 years of experience, who specializes in helping individuals qualify for a mortgage during or post-divorce. If you are concerned about a mortgage or refinance, Tim is one of the team members I consult to put together a comprehensive financial plan for your future post-divorce.
In this blog post, I will share 35 years of experience, specific suggestions, and factual knowledge to make the mortgage process for a home purchase or refinance transaction far more accurate, less intricate, and as hassle-free as possible, whether you're considering a divorce, in the middle of a divorce, or post-divorce.
I won't give tax advice, nor will I advise on financial matters that include where to put your investments (401(k)s, annuities, money markets, etc.).
So heerrre we go!
Any mortgage transaction contains three basic elements:
1. Credit Score: The higher, the better. This number is secured using a standard tri-merged report. The maximum (and best) score is 850. Scores below 580 will require both time and specific efforts to increase your score. I'll direct you on how to to get higher scores. Note that there are various loan programs to fit all scores at or above 620.
2. Income-to-Debt Ratio ("DTI"): The lower, the better. This ratio should not be higher than 45% (for some mortgage structures) or higher than 50% (for a few other available mortgage programs). These ratios are determined by adding the total monthly debt shown on the Credit Report plus the new anticipated house payment. These amounts are divided by your monthly gross income (not "take-home pay").
3. Loan-to-Value ("LTV"): The lower, the better. Basically, the LTV is determined by dividing the balance owed on the house by the current value. The value must be finalized by a licensed appraiser, not what your neighbors think. Depending on the loan program you choose, keeping your LTV at or below 80% will negate having to pay monthly Private Mortgage Insurance.
Are you concerned about qualifying for a mortgage? Give Tim a call today!