the arbor edge

The most common question we get at Arbor Mortgage is “Can I even get a loan?”.  Mortgage loans are about the 3 C’s – Credit, Capacity and Collateral. Collateral, or the home being secured by the loan, is most often not in the client’s control. Credit and Capacity (or ability to pay/income), however, are in the client’s control. So, let’s talk about what YOU can do to make yourself approvable.

Credit

Most lenders are requiring at least a 620 credit score in order to obtain a mortgage loan. 620 is not a magic number, though. Lenders are still looking at the actual credit history as well. It’s important to have at least 1 year “clean”; meaning no late payments in the last year. If there are late payments in the last year, be prepared to explain and document them.

Many will argue that the biggest problem affecting mortgage lending today is declining property values.  According to First American Core Logic’s Negative Equity report, more than 1 and 4 families are underwater on their mortgage; meaning that they owe more than the property is worth.  Michigan is actually fourth in the nation with 38.5% of mortgages underwater. These are the same people that are struggling with today’s other problems; unemployment and underemployment.  At a time when home owner’s need lower payments to survive, and the interest rates are actually low enough to make that happen, people think they will never get approved because their home value is diminished.