Not everyone was born a Rockefeller or even a Hilton for that matter. Few people have accumulated the kind of wealth to take out of their trust fund or mutual fund and make an outrageous payment on a new residential property. Nevertheless, if it weren�t for mortgage companies, Fannie Mae, Freddie Mac, VA, FHA and the government, homeownership would not be the American dream. Nevertheless, a first mortgage or home loan financing is what makes the homeownership dream possible for most Americans.
In the world of home loan finance, mortgages are approved via traditional lenders. The requirements are based on how much a borrower can afford in up front costs. The other qualifying ratios of the first mortgage include up to 28 percent of a borrowers total income on their monthly mortgage payment, and another 36 percent of debt total for mortgage expenses and other debts such as automobile loans or credit cards.
The formula of the ratios is devised to predict and calculate how much a home loan shopper can really afford. As the years go by, the mortgage rules are loosening and new products are being added to accommodate the needs of Americans in needs of a first mortgage.
In the world of lax and flexible financing, several lending institutions extend more latitude. For example, when home loan consumers shop with GMAC Mortgage Corporation, mortgages are approved for as little as three to five percent down.
As certain lenders are not sticklers in the debt to income ratios, they may pay closer attentions to a borrower�s income, payment history, assets, credit score and present cost in rental or mortgage costs, as these areas can provide a clear picture of a person�s financing credit worthiness.
Private mortgage insurance (PMI) can help the lender by protecting him from the loss if the borrower defaults on the mortgage. Generally this is required when the down payment of the mortgage is less than 20 percent of the sale price or in case of refinancing when the amount financed 80% or above of the appraisal value.