Viability of the borrower

After knowing how much the monthly payment and closing costs will be, is that house still a viable option? If so, the next thing to look at is the viability of the borrower. There are two important factors going in to deciding whether a lending entity, either a banking institution or a mortgage company will loan a person the needed funds for a home mortgage loan. First is the credit score of the person or persons seeking the mortgage. This score is the result of the three main credit reporting companies putting mathematical algorithms to all late payments, the amount of days of payments past due and defaults over many years go into a person's credit score and the average American score is 620. Banks usually want to see at least 640 before speaking seriously with a borrower about a home mortgage loan, but this is not a hard and fast rule for all banking institutions. In addition, lenders are very interested in the debt to income ratio which is divided by adding all the monthly debt payments which are made by the potential borrower and the total income of the household. In most cases, the ratio must be less than forty percent so be honest when figuring the ratio out because the loan officer certainly will.