Examine the different situation that may be faced by the borrower due to credit/borrowing.
Answers
Answer:
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Top 5 Factors Mortgage Lenders Consider
The Size of Your Down Payment. When you're trying to buy a home, the more money you put down, the less you'll have to borrow from a lender. ...
Your Credit History. ...
Your Work History. ...
Your Debt-to-Income Ratio. ...
The Type of Loan You're Interested In.
Answer:
Explanation:
Capacity
Capacity measures the borrower's ability to repay a loan by comparing income against recurring debts and assessing the borrower's debt-to-income (DTI) ratio. Lenders calculate DTI by adding together a borrower's total monthly debt payments and dividing that by the borrower's gross monthly income. The lower an applicant's DTI, the better the chance of qualifying for a new loan. Every lender is different, but many lenders prefer an applicant's DTI to be around 35% or less before approving an application for new financing.
Capital
Lenders also consider any capital the borrower puts toward a potential investment. A large contribution by the borrower decreases the chance of default.
Collateral
Collateral can help a borrower secure loans. It gives the lender the assurance that if the borrower defaults on the loan, the lender can get something back by repossessing the collateral. Often, the collateral is the object one is borrowing the money for: Auto loans, for instance, are secured by cars, and mortgages are secured by homes. For this reason, collateral-backed loans are sometimes referred to as secured loans or secured debt.