Tuesday, January 30, 2018

The Income-Assets-Credit Triangle

To obtain a mortgage at the Lake of the Ozarks, you'll need to satisfy requirements in three financial aspects: income, assets and credit. These components make up what is known as the "Mortgage Approval Triangle." While each type of loan program has different requirements, when these three factors are balanced, a mortgage approval is likely. Keep reading to learn more about each of these categories and how to balance the triangle.

The "BIG 3" of Lending

When it comes to mortgage lending on purchase transactions, the "BIG 3" is usually income, assets and credit. For the income portion, your Lake of the Ozarks mortgage lender will take a look at your debt-to-income (DTI) ratio. This is your monthly taxable income versus your monthly household debt. For the assets portion, your checking, savings, investment and retirement accounts will be reviewed for down payment funds and reserves. For the credit portion, your lender will pull your credit report and take a look at your credit score, along with other information contained in the report. Depending on the type of loan you are applying for, you'll have minimum requirements to meet in each of these categories. Your lender will be able to help you find the loan product that fits best with your financing needs.

Compensating Factors

Ideally, every mortgage applicant would have a strong income, large amount of assets and great credit. In all reality, this is usually NOT the case. Don't worry! If you have poor credit or limited assets, you're not necessarily going to be denied for a loan. This is where compensating factors come into play. Compensating factors are strengths in a person's mortgage application that will compensate for a weakness. As an example, if a borrower has low income, but also has amazing credit and ample assets,there's a chance that person may still be approved. Everyone's situation is different, and that's why it's so important that you work with a qualified mortgage professional at the Lake of the Ozarks to discuss your personal situation.

To learn more about or to get started with the mortgage loan approval process, call 573-746-7211. Whether you're in the market for your first home, looking to upgrade or maybe refinance your current home, I'm committed to helping you make that happen! When it comes to your Lake of the Ozarks home financing needs, I'll discuss your options, offer competitive interest rates and back it up with the personal and professional service you deserve.

For Lake area news, resources and tips on financial services, please 

Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct: (573) 746-7211

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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