Mortgage Approvals Methods and Triangle of Compensation

The mortgage is acquired by individual for it serves as the security for loans. It is taken for business purposes. There are many types of mortgages such as home loan, real estate mortgage, refinancing and many others.

Mortgage or finance lending has some complicated process which is why getting an approval seems to be hard these days. Financing loans approved most often when the borrower has something to put upfront for security. Federal rules and regulations for banking loans are very strict regarding this

To get approval, one may have to show certain things. These are confirmation of conforming and FHA. Borrowing money from a bank needs to have these three major things as well. These are income, equity and credit. Showing the papers or vouchers of income balance and credit balance and also calculating with the mortgage must be made.

There are three requirements that a mortgage applicant needs. These are strong income source, large equity and huge credit.

This triangle theory shows how mortgage approval works. Suppose, the income is on top, equity and credit is on the other two sides of the triangle. If income rate is low and credit or equity balance is high then the width of the other rays will extend. The mortgage gets approved on the underwriting when two out of three sides stretches. This compensating factors, i.e. credit and equity, could elevate the loan application even if the monthly income seems to be low.

These compensating factors could not be included in the employment history. This is the reason why only few have legitimate compensating factors. It is a fact that without these compensating factors, it would be difficult to obtain mortgage approval. Having a low income plus no credit which serve as a stellar and enough equity, this application were most likely turned down.


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