Kieber: What are your numbers? (column)
Has it finally come true? Have we all been reduced to what your numbers are? We have our phone numbers, our Social Security numbers, our vehicle identification numbers — no names, just numbers. That is how we are being tracked and the same is true when applying for a home mortgage refinance or a new home mortgage.
When it comes time to start the process to obtain a new mortgage there are three numbers that I look at first: your credit score, your debt-to-income numbers and your loan-to-value number. These numbers can make or break it when looking for a mortgage.
First we look at loan-to-value. This means that if you are purchasing a home for $500,000.00 and the down payment is $100,000.00 your loan-to-value is 80 percent. That ratio number is good when buying a home.
The next set of numbers that I want to know is the buyers’ debt-to-income ratios.
To come up with that ratio I will need to document the borrower’s gross income versus current debt including the anticipated mortgage payment. The mortgage payment normally includes the principal, interest, real estate taxes and home owner’s insurance. There might also be a home owners association fee and if the loan-to-value is more than 80 percent, I will include mortgage insurance costs.
Finally, I will want to know all of the borrower’s credit scores. The higher the credit scores the better. Scores can run from 400 to 850. The national average score is around 680.
A credit score too low may require us to look for a unique mortgage program. A debt-to-income ratio too high may require the borrower making a larger down payment or paying off a current debt or two. A loan-to-value ratio too high may require a number of adjustments.
With good numbers things go quicker and with less documentation. With bad numbers more documentation is needed. Maybe more time to get the mortgage approved. Or in the worst case, bad numbers may just require the deal to stop dead in its tracks.
So if you are looking to buy or refinance, contact your friendly mortgage professional well in advance to learn your numbers.
Robert (Bob) Kieber is a longtime resident of Summit County and has been closing mortgages for more than 20 years in Colorado and nationwide. If you have a question, reach Bob at 970-485-1312 or email him at rkieber@boeMortgage.com.
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