Credit rating: Most lenders will look at your overall credit score to see if you would be the kind of person that they are willing to make a loan to. They would look at factors such as how many loans do you currently have, if you are paying those loans off on time, how much credit card debt you have and has there been any previous write offs from another creditor who was not able to collect from you all play a role in determining if they should loan you the money. The more consistent you stay with making your loan payments, keeping up with your credit card bills and not have any outstanding balances with any creditors the greater your chance you will have of receiving the loan.

How much money do you make: This plays a major role in deciding if you will qualify for a loan. What lenders are looking for is how long you have been making your current annual income (usually most lenders will look at your tax returns and other information going back three years); if you have any judgments against you that could affect your income, what your current financial assets are, and how much of your income is free cash flow. This will help them to determine your financial ability to repay the loan.

While there is much more that goes into determining what a lender sees when they loan you money. Two main factors that they pay close attention to are your credit rating and how much money you make. These two factors speak volumes about what kind of borrower you are and about your ability to repay the loan.

Post from: Urban Synergy Realty, Denver Colorado Real Estate, Denver Colorado Homes for Sale

The Lenders Perspective When Approving A New Mortgage

After years of being concerned about inflation, the Fed is now concerned about deflation. So what exactly is deflation? Deflation is when prices drop, which generally is due to lack of demand, and therefore lack of pricing power. With the economy slowing down, we are hearing economists forecast that we may be in for a deflationary recession. In a deflationary environment, investors flee into fixed instruments like Bonds, because the fixed payment received would actually buy them more goods and services over time as prices decline.

So what does this mean for home loan rates? Remember, home loan rates improve as Bond pricing moves higher – and more demand for Bonds would mean higher prices for Bonds. In the spring of 2003, when Alan Greenspan uttered the “D” word, deflation, Bonds rallied 400bp in just a few weeks, bringing a significant drop in home loan rates. Of course, the economy is different right now, but as more money may be headed towards Bonds in a deflationary environment, we could again see a significant improvement in home loan rates down the road.

On the inflation front, last week’s Producer Price Index indicated that wholesale inflation plummeted last month – by the most since records began in 1947 – largely due to declines in energy prices. In addition, the Consumer Price Index showed that inflation at the consumer level fell by a record 1.0%, thanks again to lower costs of energy.

When it comes to the direction the economy is heading, the week did end with some hopeful news. Federal Reserve President Jeffrey Lacker said that an economic recovery could begin in 2009 as low interest rates, low energy prices, and less drag from the housing sector may shore up spending. In the meantime, Bonds and home loan rates spent much of last week trading near a key level of technical support called the 200-Day Moving Average, finally moving and staying above this level on Friday. As a result, Bonds and home loan rates ended the week unchanged to slightly better than where they began.

WHEN IT COMES TO CREDIT SCORES, IT’S MORE IMPORTANT THAN EVER TO DO ALL YOU CAN TO KEEP YOUR SCORE MOVING IN THE RIGHT DIRECTION! CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR HOLIDAY SHOPPING TIPS THAT WILL HELP KEEP YOUR CREDIT SCORE ON THE UP AND UP.

Post from: Urban Synergy Realty, Denver Colorado Real Estate, Denver Colorado Homes for Sale

Last Weeks Market Review