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The 5 C's of Credit.

5 C's of Credit

Character

Refers to your ability to repay the loan. This is more of a subjective opinion based on your current employment situation, educational background, business experience, etc. Much of this information is obtained from the mortgage loan application and verified by a mortgage professional and lender.

Capital

How much money will you be able to personally invest in the property (downpayment)? Mortgage professionals will also consider your ability to save money and accumulate assets.

Capacity

Can you repay the loan? Lenders will look at your annual gross income and refer to lending constraints, such as debt service ratios.

Credit

Lenders will examine your credit/repayment history by reviewing a credit report from a credit bureau.

Collateral

What will be additional security for the loan in case you are unable to repay it? In a residential real estate transaction, the real property is pledged as security for the loan.