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Require a Property Loan? Mortgage Credit Requirements Different then Auto Financing

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

Maybe you recently requested a line of credit and were told that the credit rating was excellent. Whenever you apply for an auto loan or perhaps a credit card, the scoring model computes another credit rating than when a mortgage company runs your credit. Your credit scores differ for different kinds of loans. Plus, mortgage lenders run all three credit reports in most cases take your middle score as their grounds for the loan requirements.

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

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

Property lenders also consider:

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

Understanding the distinction between a good credit score and the credit required for property mortgages can help you refinance your mortgage or buy your ideal home.