Daily Investment Tips

When you apply for a mortgage, the mortgage lender will evaluate your application based on these four factors, capacity, capital, collateral and credit.When you meet them for face to face interview the questions will revolve around these four factors. Your ability to answer the questions in a satisfactory manner will determine whether your mortgage loan application is approved

What Mortgage Lenders Evaluate

This four factors are well explained by the following article that was originally published at Freddie Mac Website

Capacity

Capacity is your current and future ability to make payments. Lenders will look at your income, employment history, savings, and monthly debt payments.

Capital

Capital, or cash reserves, refers to the reserves of money and savings, investments, properties and other assets that belong to an individual and that can be sold relatively quickly for necessary cash.

Lenders will evaluate your application more favorably if you can verify that you have cash reserves. Cash reserves show the lender that you can manage your money well and that you can count on other funds, in addition to your income, to pay the debt.

Collateral

The lender will take a look at all your possessions and property that you can pledge as security for debt.

Credit

Lenders look at your credit and on-time payment history to see your record of paying bills and debts.

Lenders will ask for financial statements to see if you meet all of their criteria. Sometimes your strength in one area can cancel out your weakness in another.

written by Constantine Njeru \\ tags: Assets, Cash Reserves, Collateral, Credit Lenders, Debt Credit, Debt Payments, Debts, Employment History, Financial Statements, Freddie Mac, Income Employment, Mac Website, Mortgage Lender, Mortgage Lenders, Mortgage Loan Application, Payment History, Pledge, Possessions, Satisfactory Manner, Time Payment

A good credit score is necessary if you want to get cheap loans. It is important you do your best to put your credit history in order to protect your credit score.

A credit score is determined by assessing a persons payment history, outstanding debt, number of years as a borrow and number of recent new accounts.

The following four credit tips will help you protect your credit score.

Start Borrowing Early

Start borrowing as early as possible. A person who starts borrowing money in college has an opportunity to develop a good credit history. By the time this person is applying for his/her first morgage he will show experience in his / her ability to borrow and pay bakc money. The important thing is to borrow small amounts that you can service comfortably.

Pay All Your debts In Time.

35% of your credit score is determined by how well you service your debt. Always pay your debt on time.

Dont Over Borrow.

30% of your credit score is determined by your level of debt. The more debt you are carrying the lower your credit score. Never borrwo more than you need.

Dont run away from your debts

If you are carry many credit cards this could indicate you are use one credit card to pay off another credit card. A sign you might be in financial trouble. Deal with all your debts at a time. When you borrow money to pay off an old debt you are only increasing the size of your debt. Asking for more trouble!

written by Constantine Njeru \\ tags: Borrow Money, Borrowing Money, Cheap Loans, Credit Card, Credit Cards, Credit Help, Credit History, Credit Score, Credit Tips, Debts, Financial Trouble, Improve Credit, Morgage, New Accounts, Opportunity, Payment History

The following factors are used in determining a credit score. Payment history, your outstanding debt, experience in borrowing and number of recent new accounts.

How Payment History affects your credit score

35 percent of a credit score is determined by your payment history. They check whether you regularly pay your bills or fines on time to your creditors.

How Your Outstanding Debt Affects your credit score

30 percent of a credit score is based on the amounts you owe each of your creditors. The more the more your credit score will suffer.

How much experience you have in borrowing and repaying money.

15 percent of credit score  is based on the length of your credit history. The older you have been a borrower the better (assuming you’ve made timely payments).

How The Number of New Accounts Affect Your Credit Score

Finally 10 percent of your credit score is based on how many accounts you’ve recently opened. Your score can drop if it looks as if you’re seeking several new sources of credit — a sign that you may be in financial trouble

written by Constantine Njeru \\ tags: Credit History, Credit Score, Creditors, Financial Trouble, Money, New Accounts, Payment History, Timely Payments