How will Carlsbad California lenders view my income and debts?

Believe it or not, Carlsbad homeowners ask me almost daily if there is any chance of getting a purchase loan or being able to refinance in today's real estate market!

I typically answer this question by asking a few basic questions back. One of the most important questions is, "How much is your average monthly income and waht are your average monthly expenses?"

The reality of today's mortgage market is that qualification standards have not changed very much for honest borrowers who have good credit, some equity in their house, and the ability to document their income and assets.

In fact, I have helped several recent borrowers obtain recent loan approvals where all that underwriting asks for is a credit report, appraisal and verbal verification of employment.

Here is a good rule of thumb if you are applying for a purchase or refinance loan in Carlsbad, or in the entire state of California for that matter:

In order to qualify for the best possible interest rate, most lenders will take your average Gross Monthly income for the last two years. they will then look at your total monthly debt. This debt will include your housing payment, property taxes, homeowners insurance, HOA fees if applicable, minimum monthly credit card payments, and any other monthly expenses on your credit report such as auto or student loans.

The next step your lender will take is to divide your total monthly debt by your gross monthly income. This will give you a percentage know as your debt to income ratio. An ideal situation is when the borrower's debt to income ratio is 45% or better...meaning that at minimum, they make slightly more than double what they pay in expenses!

Don't panic if your debt to income ratio is balancing on the fence, a good loan officer will be able to analyze your situation to provide pointers and suggestions about different loan programs that may work for you.

Feel free to contact me anytime and I will give you more specifics on how to plan for your next refinance or purchase loan in Carlsbad California.