The most important item a lender will look for when considering an individual for a mortgage loan is that individual’s ability to repay the loan. Many lenders arrive at this determination based on how an individual’s monthly income compares to his monthly debt. This figure, called the debt-to-income ratio, often is required to fall within a certain percentage range in order to be eligible for a particular mortgage. Also taken into consideration in the loan approval process is the applicants credit score, credit history, and employment stability.

Pre-Qualified & Pre-Approved – What’s the difference? Pre-Qualification is the informal determination of how much of a mortgage an individual can afford based on the information given verbally to a lender or mortgage broker. Pre-Qualification is the “quick and dirty” estimate of where you stand without any guarantee. Pre-Approval can mean a couple different things based on how a lender or mortgage broker verifies an applicants information. At the minimum, an individual with a Pre-Approval letter generally will have had his credit verified and a portion of the required financial information submitted and approved. A thorough lender or mortgage broker will have verified an applicant’s employment information and conducted a complete financial inspection in addition to the credit and financial items described above in order to provide a sound Pre-Approval.

Once again, some more great unbiased calculators to help you determine how much house many lenders think you can afford may be found on Jack Guttentag’s website by following this link: Home Affordability Make a selection from the options found under the “Housing Affordability” section.

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