Live in the Seattle area? Want to buy a home? Well, at least your mortgage will be easy! Seattle came in #11 as one of the easiest places to get a home loan with less than 6% of applicants getting denied.
It’s no secret that Seattle is known for its beauty, are fantastic coffee, and tech innovation but nestled between the Cascade Mountains and the Puget Sound, our area is also known for being one of the easiest to get a home loan. Now, I know what you’re saying, it’s really expensive to live in downtown Seattle, and you are right, but that really has nothing to do with the capability of getting a home loan. If you can afford a particular home, chances are you can get the home loan.
The only reason people are denied is their debt load relative to their income. The debt to income ratio is a huge factor when approving home loans for borrowers. However, with so many different options out there, there’s usually something for everyone. We are no longer in the subprime mortgage bust era, and lenders, as well as the federal government, have put a lot of safety precautions in place so that people are not buying homes they really can’t afford.
Today, lenders look at your debt to income ratio and anything lower than 28% is considered a low-risk applicant, especially if your credit score and history are decent but even with a debt of 43% of your income, you can still get a pretty good home loan. Really what changes are the interest rates and terms. Depending on how much you have to put down, you also could avoid private mortgage insurance. This is to cover the lender in case a borrower doesn’t have 20% to put down. This is an additional cost added to the monthly mortgage payment but as soon as the home value reaches below 80% of the loan, you can either refinance or ask for it to be removed depending on the loan you have.
The debt to income ratio, credit ratings, and income are the three main factors in getting a loan and the terms.
Credit scores over 680 – considering good to excellent – best rates best terms
Credit score 580-680 – May require higher down payments or higher interest rates
Debt to income ration of 10%-38% – Considered good to excellent = better terms
Debt to income ratio 38% – 45% – Higher risk but may still be able to get a home loan
Debt to income ratio over 43% and/or a credit score of 580 and under, may require private mortgage insurance, higher rates and higher down payment.
For more information or to speak to a lender in our area, please call me! I’ve worked with a few very reputable lenders and mortgage advisors in the area that can offer a wide range of programs and loan options to fit just about everyone.