While most people believe their credit score is the main factor for being approved for a mortgage, that is not the lenders TOP priority. FICO and PRIMA published this survey for the second quarter of 2014 that shows the DTI (debt-to-income ratio) it the main priority to lenders. Survey: Click here
When asked which factor would make them most hesitant to approve a mortgage loan application, here’s how they responded:
- High debt-to-income (DTI) ratio tops the list by a wide margin. The U.S. Consumer Financial Protection Bureau (CFPB) suggests a maximum DTI of 43%.
- The second-biggest potential red flag is if you’ve submitted multiple credit applicationsrecently, such as for a new credit card or car loan. To lenders, this means that you’re planning to take on even more debt, which could affect your ability to repay a mortgage loan.
- Low credit score comes in third.
- Frequent job changes and lack of savings round out the top five.
The full article is here