The C's of Qualifying for a Mortgage
The 4 C's of credit are capacity, capital, collateral and credit, and they're what mortgage lenders look at to determine credit qualification. Watch the video to learn more about each of the 4 C's and what they mean for purchasing your home. Click here to visit our mortgage calculator
We try and stay healthy and fit in our everyday lives. So why wouldn't your mortgage fitness be important as well? Learn more about mortgage terms, loan programs, and steps during the loan process for purchasing or refinancing your home.
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Hi I'm Courtney Lynch from New American Funding on this episode of Get Mortgage Fit we're going to explain the 4 C's.
Lenders look at every mortgage application very closely and the 4 things lenders look for in a qualified candidate are the 4 C's - Capacity, Capital, Collateral and Credit.
The first C is Capacity. This is the capacity to pay back the loan. Lenders look at the debts you have on a monthly basis, such as credit cards and financial obligations compared to your monthly gross income such as employment income and employment history. The lower your monthly debt, the easier you can afford your mortgage comfortably.The next C is Capital. Lenders want to make sure you have enough money in the bank in case of a rainy day so you can still make your mortgage payments. This can also be investments, properties, and assets you have available.
The third C is Collateral. Lenders look at the value of your property that you are using as security against the loan. That means your loan amount, vs the value of your home.
The last C is Credit. Lenders will check your credit score and history to make sure you have made your payments on time because that's a good indication that you will make your mortgage payments on time as well. This includes credit card payments, car payments and student loans, making those payments on time.
So those are the 4 C's and the stronger your 4 C's are, the smoother it is to get your dream home. Thanks for watching this episode of Get Mortgage Fit and keep watching our series to improve your mortgage health.