How Loans Are Approved


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	How Home Loans Are Approved
	Your Loan Application Begins With Your Credit Report

How Your Credit Application Was Sold! Although everyone we talk to finds this practice disturbing at best, it is important to understand that each time major credit bureaus charge anyone for a copy of your credit reports, information creditors require in making lending decisions… at the same time they also have assembled this information into “Bundles” to sell to other competing businesses in the form of “Trigger Lists.” Which is why all of a sudden you receive endless calls and competing offers for "Better" Loans and "More Competitive Rates" ....

Click Here To Learn More About This Practice & How To Opt Out

FICO CREDIT SCORING,

CREDIT SCORES: Depending on the Credit Score(s), Lenders also consider several key factors when approving loan applications (Loan to Value / Debt to Income). These factors are all designed to determine the amount of “Risk” the lender has that their money might not be repaid in a timely manner. This is where “Negative Marks” and “Late Payments” on credit reports become important in the loan approval process. As credit improves and the (Middle) score increases, Lenders tend to consider Debt to Income and Loan to Value ratios less an less; With a high enough FICO score (720 Plus) income information may not be required at all (depending on the funding source).

Click Here To Learn More About Credit Scoring

LOAN TO VALUE RATIOS: (LTV Ratio) Credits Scores aside, one factor outweighs pretty much everything else, and that is the “Equity Position.” Good Equity position or “Loan To Value Ratios” (LTV) approves loans when credit scores reflect poor payment histories. As credit scores go down lenders want to see equity positions improve accordingly. In cases of “Bad Credit,” at a certain point Equity Position becomes the major determining lending approval factor overcoming risks of nonpayment.

DEBT TO INCOME RATIOS: (DTI Ratio) Also primary to any lending decision is the consideration on any borrower’s ability to repay the loan; If borrowers can not show how they are going to repay the loan, and where the money is going to come from, “Risks” of the loan being repaid increase. This is why Lenders are so concerned about any borrowers’ debt levels, payment amounts and monthly income.