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Mortgage Qualification
Qualification for a mortgage does not mean that your mortgage application will be accepted. It simply means that you have passed a series of lenders ratios designed to determine if you can repay the debt on a periodic basis. The following application will guide you through these qualification ratios so that you can determine for yourself in advance if you can qualify. It is important to note that even though you may not qualify using these ratios, it does not automatically mean your application will be rejected. Lenders may have other means of determining whether you have the ability to repay the loan. This application may also be useful to determine the range of prices you can afford to pay for a house.
Many lending institutions follow a basic set of rules to determine if an applicant qualifies for a mortgage loan. First, all payments relating to the house, including the mortgage payment, insurance payments, property tax payments, etc. amount to (typically) no more than 28% of your gross income. In addition, all other monthly obligations, including other mortgages, credit cards, other installment loans, etc. must (typically) be no more than 31% of your gross income. These ratios are not etched in stone and could differ from one lender to another.
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