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What factors are considered for pre-qualification?

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Icon Mini Profile Sam
Sam
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PostPosted: Thu Apr 08, 2004 3:41 am    Post subject: What factors are considered for pre-qualification?

It is necessary to get pre-qualified to get a mortgage loan. Lenders consider your employment history, credit history and present income and monthly expenses to find out whether your loan can be processed.
  • Employment History:
    Lenders generally consider employment status of the past 2 years of applying for the loan. There can be changes in jobs but there should be stability in income. For those who are self-employed, lenders usually consider their personal income as well as the profits in their business. They generally prefer those self-employed persons who have 25% or greater interest in their business.

  • Credit Score:
    The credit score is a number assigned in your credit report that indicates your creditworthiness. The credit reports are generally ordered by lenders from credit bureaus who collect information about the financial status of an individual. Based on a statistical analysis of your credit history, your credit score is determined. Whether you have paid back your credits in time and the amount of outstanding credit affect your credit score. Lenders generally consider the FICO score to determine the credit score. The FICO score lies between 400 and 900. A higher credit score implies a better chance of getting the mortgage.

  • Monthly Income and Expenses:
    The housing ratio and debt ratio involving your monthly income and expenses towards debts determine whether you can qualify for the loan. The housing ratio being the ratio of your monthly mortgage payments and monthly gross income should be about 28% to get pre-qualified. The debt ratio which is obtained by dividing the sum of the monthly mortgage payments and other debt payments with the monthly income is expected to be around 36% so that you can easily pre-qualify for a mortgage loan.
Thus with a good employment status, a fair credit score and the expected level of income and expenses, a borrower can easily qualify for a mortgage loan.
 
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susie

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PostPosted: Mon Aug 21, 2006 1:48 pm    Post subject: prequalification

How can a lender pull my credit report if I have not signed an application or something giving them the right to do so?
 
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Durrell

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PostPosted: Mon Aug 21, 2006 2:25 pm    Post subject:

Hi,

I feel only when you apply for any type of credit or financing, your credit report is pulled, not otherwise.
 
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T. Gilliam

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PostPosted: Mon Aug 21, 2006 2:57 pm    Post subject:

Hi,

It might be a possibility that while buying a car from any dealer, they might have been looking for a financer for you and they may send your application for a loan to multiple banks. All such banks that they try to get you approved at will pull your credit.

It will show up as multiple hits on your credit score.
 
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Icon Mini Profile colin
colin
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Joined: 30 Jun 2006

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Location: Waltham, Massachusetts


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PostPosted: Mon Aug 21, 2006 3:32 pm    Post subject:

Hi,

Any kind of bank and credit card company should have written authorization from your end which allows them to check your credit report.

If any company you do not have an account with and have not been authorized from your end to pull your credit, it is absolutely illegal and you can file a complaint with the Federal Trade Commission.

Colin
 
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