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Require a Real Estate Loan? Mortgage Credit Requirements Not the Same as Auto Financing

Qualifying for any real estate purchase requires different credit than auto financing or credit cards. Actually, you may be able to go out and buy a brand new car today, however, you might be turned down for any mortgage. However, you can buy a house and be rejected to have an auto loan.

Perhaps you recently applied for a line of credit and were advised that your credit rating was excellent. When you make an application for a car loan or perhaps a consumer credit card, the scoring model computes a different credit score than when a mortgage lender runs your credit. Your credit scores differ for different types of loans. Plus, mortgage brokers run the 3 credit reports and usually take your middle score his or her grounds for the loan requirements.

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However, some mortgage companies, especially non-prime lenders, will use your highest credit rating. For a mortgage refinance, some lenders don't even operate a new credit history if all of your mortgage repayments were made on time. They will use your credit rating from the time you first applied with them.

Besides your credit rating, mortgage lenders consider your debt-to-income ratio and other credit matters, unlike other types of credit grantors. Your debt-to-income ratio may be the comparison of mortgage payment, including taxes, interest, and insurance to your total gross monthly income.

Real estate lenders also consider:

    Your education
    Your earnings
    Your employment qualifications
    Your overall monthly debt payments

Understanding the distinction between a good credit score and also the credit required for property mortgages helps you refinance your mortgage or purchase your ideal home.