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Credit or Income – Which Is More Important?

Kurt Clements Real Estate Leave a Comment

We often get asked the question ” Which is more important: credit or income?” Our answer is always the same, “both are equally important”. According to Well’s Fargo, there are 5 important factors which qualifies you to purchase. They call is the 5 C’s of mortgage lending. Credit, capacity, collateral, capital, and conditions. In this article, we will give you our Insider Show Homes explanation of each. Therefore, you will have a better idea of what mortgage lenders are looking.

Credit

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No matter how much money you make a month or how much you have i the bank, if you show a history of unwillingness to pay your bills on time you will be denied every time. The tricky part with credit is that even a small collection from your utility bill company can affect your scores and cause your ability to purchase to drop dramatically. The bottom line is you need to pay all of your bills at all times so there are no questions with your ability to pay back the large mortgage you are asking the bank to lend you.

Capacity

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Capacity is a fancy name for your income. Lenders are looking at your ability to pay back not only your mortgage, but all of your other outstanding debt. If you are loaded up on monthly debt lenders are going to have a hard time approving you for an additional payment that your income doesn’t support.

Collateral

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The house that you’re buying has to be worth what you are willing to pay for it. In today’s mortgage market consumers are protected by strict appraisal guidelines. This assures that what you are buying is worth the price tag.

Capital

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Get your money out of the shoe box and into your bank account. Lenders need to show that you have the ability to put some of your own “stink in the game”. Gone away are 100 percent financing opportunities of the past. Today’s buyers need to be able to put a down payment into the transaction to show their willingness to pay the money back that they are planning to borrow.

Conditions

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For the purpose of home buying, conditions are going to be to accomplish the end goal of making you a home owner.

Also, for a free digital download of our guide “5 Insider Tips To Becoming A Homeowner” text “INSIDERSHOW” to 44222.

About the Author
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Kurt Clements

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Kurt has developed a unique system designed to turn renters into homeowners. Unlike most Realtors his initial focus is on the financial end of the transaction. This dynamic has allowed him to develop more buyers that were not previously in the market, which in turn leads to more listings being sold. While Kurt is constantly tweaking his programs to meet the needs of his clients, he is ever mindful that a home is not sold without a buyer. More times than not, a buyer that he turned into a homeowner.