How Intercontinental Capital Group Can Help You Prepare to Qualify for a Home Loan
Purchasing a home is a huge financial commitment. Before getting wrapped up in the excitement and stress of house-hunting, it’s important to measure your expectations for what you can afford and your home loan options. Beginning with this crucial step can make the entire process more efficient - getting you settled into your ideal new property quicker.
Whether you are actively looking for a new residence or know moving is going to be part of your future, it’s always important to understand how your actions can affect your prospects at securing a loan. Our lenders at InterContinental Capital Group have shared three things they evaluate in a mortgage application so you can be prepared to put your best foot forward.
A thorough assessment of the "3 C’s"
Dustin DiMisa, CEO of InterContinental Capital Group, founded his company on the belief that home financing should be a straightforward and individualized process. Today, ICG pairs every applicant with a licensed mortgage specialist from their state. Clients will be educated on their local housing market and walked through their own 3 C’s to understand how likely their loan request is to be accepted.
1. Credit Score
Your credit score is the first item that lenders will assess to determine your eligibility for a loan. As Credit Karma explains, your backer will generally seek out your middle score from the three major credit bureaus. They are ultimately looking to see if you have a long track record of using credit responsibly.
A higher credit score usually means a better chance for approval at lower rates, so it's crucial for prospective homeowners to continuously monitor their number. If you want to improve your credit score before applying for a loan, Credit Karma suggests fixing any delinquent accounts, making every payment on time and trying to use less than 30% of your available credit. Additionally, avoid opening any new accounts if you are looking to put in a request soon.
With many accessible - and free - options for checking your credit score, you can be actively improving your chances to receive a home loan. If you need more guidance on how your spending habits may be affecting these odds, a qualified lender from ICG can walk you through the fine details and help make an improvement plan.
Lenders want to be assured that you have the financial means to honor your monthly loan payments. Just because you can take out a massive loan doesn't mean you shoud, as NerdWallet emphasizes, both you and your lender should be focused on how much you can afford rather than how much you can borrow.
There are many factors that a creditor will evaluate to determine your capacity to make monthly payments, including your:
- Debt-to-income ratio
- Loan-to-value ratio
- Annual income
- Interest rate
As the hopeful homeowner, you should also be realistic about the other "what-if" scenarios that could impact your ability to pay your monthly fees. For instance, moving into a new space can result in extra money being spent on needed renovations, general maintenance and new furniture. These expenses can add up quickly within a short period of time, possibly leaving you strapped for cash when your payment is due.
Carefully plan out all scenarios to better understand your capacity, and utilize some online tools like those offered by NerdWallet to get a better understanding of your financial position. Before applying for a loan, try to pay off some of your existing debt and rearrange your budget to include some of the what-ifs and a down payment.
3. Collateral Value
Understandably, your home is usually used as collateral for a mortgage. This means if you stop making your monthly payments, the lender can take possession of your home and possibly sell it to repay the loan. Financer’s take the value of the collateral into consideration when assessing a loan request.
If you are asking for a million dollar loan and your home is worth only a fraction of that, your application is going to be rejected. Lenders want to be confident that in the worst case scenario if a client is unable to make payments, they can sell the asset to recoup their loan amount.
Being realistic about your collateral value is important to understand how much you are likely to receive from a lender. This can also mean reaquirement of thorough inspections of your new home to make sure there will be no costly surprises that could lower its value.
At ICG, home loans can be provided without taking collateral beyond the property that needs financing, which is ideal for protecting your other personal assets.
Adding technology to the mix
These three easy steps provided by ICG streamline the home loan process while giving potential homeowner's insight into what it takes to qualify for a mortgage. If you have a good credit score, can make your monthly loan payments on time and have strong collateral value, the loan acquiring process is easy.
Furthermore, ICG has utilized a wide array of digital tools and technological advances to help their clients. Allowing you to take control of your finances and understand the entire process, the Electronic Loan center allows you to monitor the process of your application and receive and sign electronic disclosures. Moving these processes online makes the loan processing journey seamless and transparent.
Comprehending what lenders are looking in your application can help you take steps to better your chances at qualifying for a home loan. Being prepared with the 3 C's can move your application along swiftly, as can knowing what kind of loan you want or need.