Home Equity Loan

Lenders use the Combined Loan to Value Ratio (CLVR) to calculate your qualifications. The minimum in Texas is 80%, meaning that you will need equity of at least 20% to qualify.

No, you can use your Home Equity Loan for anything, including paying down debt, making improvements to your home, paying for college, or any other financial need.

They may. Your equity is based on the amount you owe as it compares to the current appraised value of your home. If the value of your home is higher than it was when you bought it, you will have a higher amount of equity.

Mortgage prequalification is an assessment of whether your debt-to-income ratio fits mortgage guidelines and provides an estimate of the amount you may be able to borrow. A prequalification letter can also be given to your real estate agent to show you are a serious home buyer. Prequalification is optional, but it's a helpful step in the process of buying a house..

Mortgage prequalification is free and doesn't require a commitment from you or the bank or credit union.

Mortgage prequalification checklist

It is convenient to get prequalified and can help you in the mortgage process. Here's what you'll need to provide for a mortgage prequalification:

• Your name (plus any co-borrowers' names)
• Your current address
• Your estimated annual household income
• Your estimated monthly household debt expenses

You can apply for pre-approval at any time, regardless of whether you've completed the prequalification process. You'll complete a full mortgage loan application, which will include the following information.

This is a partial list as varying information and documentation can be requested during the closing process. Your mortgage specialist can tell you about any additional requirements.

Residential History

1. Your residential address for the past two years
2. Landlord names and addresses for the past two years

Personal Assets

1. Past months checking and savings account statements
2. Past two months for other investments, including CDs, IRAs, stocks, bonds or other securities you intend to use for your down payment
3. Current real estate holdings, including property address, current market value, mortgage lender's name and address, loan account number, balance and monthly payment

Employment & Income History

1. Paycheck stubs from the last 30 days showing your year-to-date earnings
2. W-2 or I-9 tax forms for the past two years

Personal debt

A list of any new monthly debts not listed on your credit report (auto loans, student loans, mortgage loans, credit cards, etc.), including creditor name, address, account number, minimum monthly payment amount and outstanding balance on each account.

Additional documents may be required at your mortgage closing. Your real estate agent and mortgage loan officer will let you know which documents will be needed when you close on your new home and they'll work closely with you at each step of the mortgage loan process.

Your credit score, or FICO score, is a number that reflects your financial responsibility and helps lenders decide if you're a credit risk or not. Your score is based on - but not part of - your credit report. It's generated at the time of the request, then included with the report.
The five factors that determine your Credit Score are:

• Payment History - (approximately 35% of your score) The factor that has the biggest impact on your score is whether you've paid past credit accounts on time.
• Amounts Owed - (approximately 30%) Having credit accounts and owing money doesn't mean you're a high-risk borrower. But owing a lot of money on numerous accounts can suggest that you are financially overextended and more likely to make some payments late or not at all. Part of the science of scoring is determining how much debt is too much for a given credit profile.
• Length of Credit History - (approximately 15%) In general, a longer credit history will increase your FICO score. It shows that you can responsibly manage your available credit over time.
• New Credit - (approximately 10%) Opening several credit accounts in a short period of time can represent greater risk; especially for people with short credit histories. Requests for new credit can also represent greater risk.
• Types of Credit in Use - (approximately 10%) Your FICO score will reflect a combination of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. While a healthy mix will improve your score, it is not necessary to have one of each, and it is not a good idea to open credit accounts you don't intend to use.

Learn more about what determines your credit score and how your score is interpreted.