Think of your lender as a part of your team – just like your realtor. And a good lender is a high level financial investigation team. Sometimes it can feel almost intrusive as they try to find out about you and your real estate goals. But, here’s why ask so many questions and what they are looking for to qualify you as a borrower.
Their goal – and mine – is to make the process as smooth as possible for your purchase or refinance and get you the best loan for your situation.
- First task is to ask you lots of questions about your goals
- Then gather crucial personal financial information about you
- From there, they will find the program which works best for your current and long term home goals.
- And search lender guidelines to make sure your situation fits the lender guidelines.
Over 35 items go into determining a client’s ability to borrow. Three key components are Credit, Income and Down payment. Of course, there are more – your lender will walk you through the process.
Credit scores: 740 is the best and where you will get the best rates but lenders can do loans in many cases with credit scores as low as 620.
Credit history: bankruptcies, short sales or foreclosures. BK’s they can usually do in 2 years depending on lender, short sales 3-4 years depending on program, foreclosures 3-5 years depending on program.
Income: you don’t have to have a job to get a loan but you do have to have steady income which usually will continue for at least three years. Some income sources used to qualify borrowers are: W2 employment, self-employment, trust, corporate, social security, pensions, interest dividends, capital gains, rentals. Quuick cash, such as an inheritance, acutally doesn’t help in securing a loan. A lender wants to know that you will be able to pay over time.
Down payment: many options are available so this is really something to call your lender about, but you absolutely in many cases, do not need 20% down. For example, just to name a few options: Veteran Loans (0% down), FHA loans (3.5% down), Conventional Loans (5% down payment) Second Home Loans (10% down)
I work with a number of wonderful local lenders. Feel free to contact me for their names.