The 3 C's of a mortgage loan

On day one of my career in this business I learned the 3 C's of a mortgage loan. As a home buyer, it is important to know what they are and why they are important when trying to get your loan approved.

Credit -- no doubt, credit history is the entry ticket. Scores range from 500 - 800 [I've seen better and worse, but not often].

Capacity -- your ability to repay the loan. You'll hear the term "debt to income ratio" -- this is the measure we use to (try to) make sure that you don't get in over your head.

Collateral -- this can be the amount you put down or amount of equity if refinancing AND assets / investments that you have that you may not be using for the transaction. We typically use LTV (loan to value) as the guide for this one of the C's.

All of this gets thrown into the pot and usually a computerized underwriting system will evaluate the risk level of your 3 C's. No, we aren't completely dependent on a computer for our approvals, but pretty darn close these days ;-)