Mortgages Glossary Q
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Qualification
The analysis of individual borrower to find out if he is eligible for a mortgage. During qualification process, lenders will look at the following factors.
- Credit History
- Assets
- Current Status(own/rent)
- Type of property you want buy, its cost.
- Past loans
- Income
- Employer
- Number of years employed
Qualification Rate
Rate used in initial calculation of mortgage payment. For example Ron is getting a new mortgage. Interest rate that was offered is 6%. Lender will use that rate to calculate Ron’s mortgage payments, making it a qualification rate.
Qualifying Ratios / Qualification Ratio
Ratio used by lenders to calculate total amount that an individual is eligible for.
Debt-to-Income Ratio represents percentage of monthly income that goes towards paying off debt.So if you earn $5000 per month and have mortgage and car payments totaling $2000, your qualifying ratios ratio will be: 2000/5000 * 100 = 40. Meaning that 40% of your income goes towards paying off debt.
Lenders usually do not give out loans that require borrowers to pay more than 36% of their income towards the mortgage.
Qualifying Guidelines / Qualification Requirements
Guidelines used to analyze if a person is eligible for a loan. This includes:
- Credit History
- Assets
- Current Status(own/rent)
- Type of property you want buy, its cost.
- Past loans
- Income
- Employer
- Number of years employed