Steady Income for Good Mortgage Rates

by admin on February 23, 2014

People with poor or fair credit face more limited options because they are considered risky by financial institutions. Borrowers can choose from different types of lenders, including brick-and-mortar banks and non-traditional entities. Banks offer different products, including bad credit personal and auto loans. Some financial institutions offer mortgages to borrowers with fair credit. Borrowers with poor credit are often offered adjustable rate mortgages and higher interest rates. Borrowers with poor credit have better chances to qualify if they offer a sizable down payment. Banks offer different financing options to home buyers who make a considerable down payment, including fixed and variable rate mortgages, and others. Down payment ideas include sources such as government assistance, taxable investments, your retirement savings, percentand others. To find money for the down payment, you can liquidate assets such as collectibles, works of art and vehicles. A considerable down payment of 20 percent or more means a better interest rate. The combination of a considerable down payment and passive and active sources of income increases your chances of approval.

Approval also depends on your income level, i.e. a high income is considered a compensating factor. Overtime, bonuses, tips, and commissions boost your income. Getting a second job and seasonal income also increase your income level.

It is important to demonstrate a steady income stream which shows that you are able to make payments toward your mortgage. A mortgage is a secured type of debt, and financial institutions require some type of collateral. Secured debt is a better choice for borrowers with compromised credit because they are considered risky by banks.

Examples of assets to be used as collateral include money market and asset-backed securities, gold, bank loans, and others.Examples of collateral include cash equivalents, jewelry, equipment, and more. Financial institutions also offer unsecured loans for major purchases, repairs, emergencies, etc. In addition to a higher interest rate, another issue is the shorter term of repayment. The requirements and criteria depend on the lender, type of loan, amount, and other factors. Borrowers are usually asked to present proof of income and employment. Whether you are contract or probationary employee is also taken into account. Whatever the case, make sure you list all sources of income, including part-time employment, rental income, cash gifts, cash in savings accounts, and others. The main differences between secured and unsecured debt are the interest rate and repayment schedule.

A shorter term means higher monthly payments, but borrowers pay less in interest charges. Timely payments improve your credit score and increase the range of options available.

Related Articles:

ScotiaBank.com

YourLoan.ca

CIBC.com

 

 

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