Green Mountain Mortgage

Important information for obtaining a mortgage to purchase a home:

Credit Grade
There is a credit grading system that ranges from A – D
Depending upon a persons credit grade will determine two very important things. How much you will qualify for and what kind of an interest rate we can get for you.

Fico Scores
In an effort to streamline the approval process a scoring system was developed. In addition to your credit grade you will have a numeric value assigned, 400-800’s the higher the score the better your credit is and the better your rate will be.

Down payment
Your credit grade and your fico score determine the amount of down payment you will need.

Employment history
You will need a minimum of 2yrs employment in the same field, not necessarily the same employer.

How much do I qualify for?
Take your monthly income divide it by 2 then subtract the minimum monthly payments due on all your credit cards, car payment, loans, cell phones, etc. (do not include heat, electricity, rent, insurance, telephone). Then subtract the taxes and homeowners insurance that would be due on the new property ($200-$300. is probably a good estimate). That will give you the amount available for a monthly mortgage payment. At 7% interest every $6.65 will qualify $1,000 worth of mortgage money (a $100,000 mortgage would be $665.30 per month)

Debt To Income Ratio
Your debt to income ratio is determined by taking your total monthly bills (credit cards, car payment, loans, cell phones, etc. do not include heat, electricity, rent, insurance, telephone) divided by your total monthly income. $1,000 in bills divided by $2,000 in income = 50% debt to income ratio.

LTV (loan to value)
Your LTV is determined by dividing the amount you want to borrow by the sales price or appraised value of the property (if you are refinancing). You want to borrow $50,000 and the house appraises for $100,000 = 50% LTV

Assets
How much money or equity do you have including, money in the bank, stocks, bonds, IRA, Keogh, cash value of insurance policies, or other property owned.

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