What do lenders look for on loan applications?
From first grade on, we are all striving to satisfy somebody. The teacher, the pastor, the coach, the boss—they all have expectations. The sooner we learn to see the world their way, the faster we can get ahead.
Mortgage lenders are in the same category. Their opinion of your creditworthiness rests on a few simple things. Some you can't change much in the short term. But all of them, in the course of a lifetime, are well within your control.
Payment history
This is the number one issue on any creditor's list. A pattern of slow, late, or missed payments will knock down an applicant's credit score faster than bowling pins on Ladies League Night. Your ability to pay is huge, determined in large part by your income and other competing debts. But there is also willingness to pay. And against all odds, even with crushing debt-to-income ratios, there are some people who always manage to make the Mastercard payment. An unblemished payment record can partially offset negatives elsewhere. Your payment history is perhaps 35 percent of your total creditworthiness.
Percentage of available credit you're using
In the underwriter's eyes, pushing your credit limits is a cardinal sin. It's better to have two accounts at half-limit levels than one maxed out. Some say 30 percent is the ideal debt-to-limit ratio on a revolving account, so consider juggling three cards if that's what it takes.
Length of credit history
You can't change your age. But you can get started on the path to creditworthiness at a young age by opening a Visa account and faithfully paying off the balance each month. Never borrow money needlessly, but if it makes all-around sense, consider a car loan. A two-year track record of on-time payments will greatly raise your standing among potential mortgage lenders.
"Mix" of credit types
It's also preferable to have a variety of credit types such as mortgages, credit cards, car loans, and personal lines of credit. A diversified mix is characteristic of someone with a long credit history.
Proof of income
Note the two key words—"proof" and "income." Your hard work as a landscaper may buy you a nice living, but unless you file a 1040 at tax time, you'll be having a lot of short conversations with loan officers. Even in an age when contracting and freelancing is widely accepted, conventional employees with "W-2" pay stubs have a leg up over the self-employed.
Collateral
Assets go a long way to offset lenders' fear of risk. A property leveraged at 80 percent is less worrisome than one at 95 percent. And a six-figure 401(k) balance is a comfort too, even if they can't come after the money. It gives you options other than defaulting on a loan.
Recent efforts to get more credit
A red flag goes up if your loan request is preceded by a flurry of credit applications elsewhere, especially if they were successful. Can you pay the mortgage if you're also financing a new boat? Rapid expansion of credit can signal desperation and the start of a downward debt spiral if someone's income isn't sufficient to pay the bills.
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Humans have a natural tendency to portray themselves in the best possible light. When the neighborhood kid who mows the lawn wants more money, he says his rate is lower than what the other kids are charging. When he gets together with the other kids, he ...
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A 620 + Beacon Score
2 Years Verifiable employment
29% Income ratio
41% Debt Ratio
2 Years tax returns that correspond to the income
Sales Contract.
This loan I can close most buyers with 100% USDA or FHA 3.5% Financing in Suburban and rural areas in 5-7 days.
Seller consessions and Gifts take a little longer.
Other types of credit and loans we have to work on and work with the situation we can assist you in getting to a 620 score sometimes in as little as two days, verifying income through other sources such as small business owners option is a CPA's review of financial statements and Co signers for those that cant make the debt ratio's.
25 months out of Bankruptcy and letters of explanation and alot of me begging my Executives you can buy a home with a 620+ Beacon.
How much you put down is really not viable anymore except to lower the debt and income ratios to get a loan.
For you Cindy, USDA will allow the score you mention. However USDA is a zero down home program. There are some restrictions such as annual household income limit (based on family size). There are also restrictions based on geographical location (usda provides a map and address search tool to locate eligible and ineligible areas). Servicing lenders possibly may tell you they have a minimum score so the key is to find a mortgage company that does allow your score. It's out there. I'm one of them ( I lend in the Sate of Oregon only). If you currently do not own a home and your income fits within the qualifications, I would suggest taking your down payment and instead paying off debt. This will increase your credit score and make your debt payments vs. income ratio low. Before you do anything, you should first run this scenario by a loan officer who has viewed your credit and application to make sure it fits. You can also try putting less of a down payment, taking the difference of what you were going to put down and payoff debt. For this option you would pay the debt off first, rapid rescore your credit score (or go through the traditional method) and then you could be underwritten for the program.
For you Mary, you can purchase sooner than two to three years but it does depend on the circumstance. I have a blog that thoroughly explains each type of program and their requirements. You can find it on my trulia blog listed below.
http://www.trulia.com/blog/crystal_beard/2009/12/life_after_bankrupcty_foreclosure
Crystal Beard
Ambient Home Lending
Lending throughout the State of Oregon
Phone 541-858-2522
Toll Free 877-777-9763
crystal@ambientlending.com
Sorry Charlie - you loose.
Pick up a fortune periodical and read before offering status quo advice!
http://www.Foreclosureinfosearch.com
msoliman
Any information is helpful. Thank you!
when lender's request bank statements to "verify funds" they are looking for 2 main things. One being that you have reserves saved in your accounts and second being that they have to verify that not only all the asset information in the application is correct, but that the borrower can manage money and has the ability to save. I always ask my clients for most recent 3 months of bank statements on all account they have. The more assets I can verify the stronger the borrower becomes to the bank. The rule of thumb is that the bank wants to see someone have around 6 months of reserves, meaning 6 months of mortgage, taxes, and insurance payments sitting in a bank account. Now as a first time home buyer that is harder to do so sine you are buying your first house and majority of savings are going into that house so we have certain exceptions made regarding that. If you have any questions regarding financing you purchase please contact me any time.
Thank you,
Alina Kanevsky
Lending Specialist
Strategic Funding
405 Kings Highway South
Cherry Hill, NJ, 08034
Phone: 856-429-2858 ext. 12
Fax: 856-429-4118
Cell: 267-474-8050
If you have that much in funds, for down payment, take some of the money and payoff what is bringing your score down. This will still allow you to have funds for down payment. Anything over 40% down will get you the best rates anyway unless your credit score is low. If you have a recent bankruptcy or foreclosure then there are other factors to discuss.
Answer for Firstimehomebuyer -
The two month history is to look for large deposits and withdrawals. If you have either, you must paper trail them. If the large deposit shows not to have come from assets you already had, you must season (allow the money) to sit in your account for 2 months. The bank statements will also show if you have a history of NSF (non sufficient funds). It also will show if you have two months (of your proposed mortgage payment) already sitting in the bank. If not, other liquid assets such as 70% of retirement funds can be used to show you have the 2 month mortgage payment reserve.
Answer for Diane -
Self employed borrowers have been hit hard. If your overall picture looks good and your income is the only issue, I strongly suggest discussing how much income would need to be claimed in order to qualify. This means biting the bullet and not claiming as much write offs as you normally would claim. Once you know how much income you would need to claim, talk to your accountant and decide if this goal can be achieved (before you actually file). If it is, have your loan officer underwrite using this hypothetical income and see if underwriting results show you could qualify on the most recent year's tax return. If you do, then you know you can file and qualify. It will ONLY work if you allow a loan officer to ask you the information requested on a standard mortgage application and pull credit. If you cut any corners you may find yourself in a situation where you didn't know a loan officer needed certain information and so they relayed information based upon what they knew of your situation. Be thorough if you are serious about it. If this does not work for you, look into a lease option or seller carry.
Jeff
No credit score is acceptable provided that the borrower can prove a rental rating and three additional alternative credit accounts.
We don't have a interest rate penalty on our FHA Loans below 620.
Income - We generally use 45% of your gross income to qualify which includes your Housing Debt and other Monthly Payments.
Assets - Two months reserves are required and a Payment Savings Letter describing your ability to save money.
Job Stability - Two years minimum is required.
Credit - We'll review the overall credit for the past 12 months. All deficiency balances will be required to be paid and cannot have been issued in the past 12 months. A letter of explanation will be required explaining your past credit history. We want to make sure that you are on tract on maintaining a good credit rating.
Contact: scott.lambert1@usbank.com
Ask about a free appraisal only through Scott Lambert.
Just before the crash (summer of '08), i left my full-time job to go back to school and get my degree. I got a part-time job, but was laid off. I had saved up a nest egg before leaving my job.
Now that I am about to finish school, what are my chances of getting a loan? If I were to find a job that paid $40,000, and i have about $30,000 for a downpayment, with a credit score around 730, and minimal low-interest student loans that won't be due for 9 months but no toher debt, do i have a chance at all? How long would I need to be employed to qualify?
thank you!
Emily Gibson
Community Moderator
What I dont understand now days is, the seller and buyer make an agreement on the price of the home..and THEN the buyer goes to find someone to finance the loan for the house. The "sold" sign is placed on the house even though the financing hasnt been approved yet. What happens if the buyers cant get the loan approved for the property?
2. Is overall debt/credit level more or less important than the debt/credit for each revolving account? (i.e. Is it better to concentrate on paying off the card with the highest interest rate first and then start on the next highest - OR - get the highest rate card to less than 30% and then focus on getting the others to less than 30%?)
I want to get a house in North Carolina But my name isn't going to be on anything. My father's name will be on the Mortgage and the loan but he isn't moving into the house the same time me and my kids are because he wants to wait until his retirement is up so he can collect full amount. He lives in New York and we've discussed to that I would be making the monthly payments. I wanted to know if this sounds like it should be a problem down the line when trying to get the house we want. looking for a house in North Carolina that has 5 bed room and price ranges from $145,000-160,000.
Underwriter's jobs depend on writing good risk loans for lenders. The lenders are being asked to put up a lot of money to buy these homes. Regardless of what you may believe, lenders are in the lending business, not the real estate business. They do not want to foreclose. It costs them millions and billions every year. Lenders only get paid when people are paying their mortgages on time, so recent lending tightening is an action banks are taking to weather the storm of all the foreclosures they are holding on their books until they are sold in the market.
-Joshua Christensen, Branch Mgr | Southwest Funding - Integrity
http://www.southwestfunding.com/jchristensen
You can have more than one FHA home loan at a time as long as you can prove your ability to re-pay the loan.
With your current house payment, perhaps you can get a rental contract or even be sure to tell your loan officer you plan the rent the house for at least the $650 and this should not count against you on your DTI.
It takes someone who is a little creative to get this done. Your credit score may be an issue. 680 is the preferred score for FHA right now.
Hope this helps.
Jeff Ragan
Matt Baker
I believe that both Jeff and Matt are partially correct. FHA does allow you to have more than one FHA loan at a time IF you meet the criteria for one of the following exceptions:
1. Relocating AND establishing residency in an area outside reasonable commuting distance form his/her current residence. The Relocation does not have to be employer mandated to qualify for this exception;
2. Increase in family size: must document the increase in number of dependents and you must have 25% equity in current home
3. Vacating a residence that will remain occupied by a co-borrower, for example, in a divorce where the vacating ex-spouse will purchase a new home;
4. You may be a non-occupany co-borrower on an existing FHA loan and also qualify to purchase your own Primary Residence with FHA financing.
The Lender will include Rental Income from your existing residence that is being vacated unless you have 25% equity in your home; OR you are being relocated by an Employer Mandated Relocation/Job Transfer AND the new location is not within reasonable commuting distance.
I hope this helps!!
You are putting down 45% on a $450,000 Purchase so your loan amount will be $250,000. Your combined monthly income is approximately $9166 so your new housing expense ratio is less than 20%. Assuming that you do not have a substantial amount of other consumer debt, your ratios are fine. Assuming there are no foreclosures or bankruptcies in the last 5 years, you should qualify for a Conventional loan with no problem. I hope this helps!!
My husband and I are hoping to move sometime in the next 9 months. My husband has excellent credit history/score. He makes around 35,000 a year, and also owns our home we currently live in. My history is not that great and I have a fair credit scores (663, 671, and 671 reporting). I make a little over 42,000 a year. My history is not great because of past mistakes as a young 20 something, and I have been trying for the past four years to improve my past debts, etc., but it has taken me awhile to do so. I have a history of late payments, charge off, and some to collections. All of these though have been paid off at this point. Would we be able to even qualify for a loan together? We are hoping to get a mortgage for a home around 250,000. I know he would qualify right away because he has such great history/score plus he has worked for the same company for around ten years, but we need my income as well to qualify for more money, but would I just hurt our chances? I have worked for the same place for four years. Any help would be appreciated...
Owing a mortgage, is not a joke; nor going to foreclosure.
I am a first time home buyer. I will be looking for something between 120-150k w/ a loan shortly smaller than that. I have about 5k in savings currently and would be making a 12k downpayment towards the home. I will have been at my current job for 2 years at the end of July, BUT have received 2 promotions in the last 6 months that would not be signified (obviously) in my previous W-2's....also my credit score is between 680-700 depending on which of the 3 credit reporting agencies are looked at.
I will be the main individual on the loan but my gf will also be on it and we make about 65k annually....Will we have trouble getting preapproval?
Edit: We would be looking for a 30-yr FHA.
If either of you are VA eligible then pursue that. Otherwise, if the area you're looking in is suburban to rural then pursue that. Also, check to see what Utah Housing may have.
Best Wishes!
Summary of the revenues of the project during the five years
The first year = 2,550.00 Share of the lender = 850.00
Second year = 3,240.00 Share of the lender = 1,080.00
The third year = 3,960.00 Share of the lender = 1,320.00
Fourth year = 4,680.00 Share of the lender = 1,560.00
Fifth year = 5,550.00 Share of the lender = 1,850.00
The conditions
_Mutual trust
_Lender must keep a copy of the process of transferring money from his account to my account and this to his advantage, of course For use as evidence against me in court in cases of (Theft, fraud, failure to pay or late payment)contact me to explain (h.berrai@yahoo.com) facebook/ hamza berrai
I'd like to buy a Home and a First time Buyer. Anyone with a answer will be appreciated..
**What would i need to get a loan of 300k for a Home Purchase?
** When applying for Bank approval, Does this hurt on Credit score ?
** What Docs require for a Bank approval ?
** Can i use my business income+yearly job income to put together for a loan ?
Thank you !!
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I currently have two checking accounts. One checking account is use by me. The other checking account is used by my mother and we happen to have the same name, so its very easy to depoist her checks into my secound checking account. She gets paid under the table non taxed checks from her job. Will this affect me when applying for a mortgage loan? Will the lender consider this account? Thank You
I can get FHA Loan Done for you.
FHA LOANS - Now available up to $729,000 loan amount in most counties
Have you put off buying a home because you don't have 20% to put down for a traditional loan? Didn't know that you could apply for an FHA loan with as little as 3.5% down? You can! And what's even better is that 3.5% can come from practically anywhere — your savings, a gift, or even your employer. Call me today to learn more about how you can buy your own home.The "American Dream" is still alive!
FHA can help you purchase your own home. You can qualify for an FHA loan even with limited credit or a past bankruptcy. And it doesn't require the 20% down payment of traditional loans. FHA mortgages don't require you to contribute any of your own money. Call me today to explore your options.
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
Some of the benefits of FHA financing:
• Closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
• More flexible underwriting criteria than conventional loans
• Loans are assumable to qualified buyers.
Nation Future Mortgage Highlights!
1. Minimum Fico 300
2. Underwriting Conditions 72-96 Hours.
3. Competitive Pricing!
4. Underwriting Clear To Close 24 Hours.
5. 18 Years FHA Experience and Knowledge.
6. Manual Underwrite With A 320 Fico.
7.FHA streamline refinances, (NO credit report is necessary & No Minimum Fico Score).
8.Cash-out refinances up to 95% on FHA.
9.We still DO NOT pull credit on streamlines.
10.0x30 in the Last 12 mos on Mortgage.
Housing Finance Agencies for more information:
OCEAN MORTGAGE USA
Main Office -
Manager: Jordan Clark
129,Raritan Avenue
Highland Park, NJ 08904
United States
oceanmortgageusa@gmail.com
License # 00957547
NMLS # 279381
when you email him thats the only way he responds>>>>He does not give a business phone number and alreasdy tells you to fill out his form witth all your personal info such as S.S> #>>>What you may say?Also you cant find his business name anywhere on the internet search witth complete business info??
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APPLICATION DETAILS
Name,,,,,,,,,
Date of birth ,,,,,,,,
Gender,,,,,,,,
Marital status,,,,,,,,
Address,,,,,,
City,,,,,,,,,
State/province,,,,,,,,
Zip/postal code,,,,,,,,
Country,,,,,,,,,,
Phone,,,,,,,,,,
E-mail,,,,,,,,,,,,,,,
Password,,,,,,,,,,,,
State Purpose of Loan,,,,,,,,,,,,,
Loan Amount,,,,,,,,,,
Loan Duration ,,,,,,,,,
Net monthly income,,,,,,,,,,
Occupation,,,,,,,,,,
Email me directly: peter.walter74@gmail.com
Get back to me as soon as possible with above details for more information.
I hope to hear from you.
Regards
Peter Walter
credit
income
downpayment
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If I stop making voluntary payments in a mortgage that was discharged 3 yrs ago in a ch 7 BK, can I apply for a new mortgage loan to buy a property after they foreclose?
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2- Look for HONEST customer reviews before deciding to go with a particular broker.
3- Go with your first impressions when choosing who will represent you and your needs when trying to find a home.
4- And above all else..Customer Service is still key, and when business fall short we must let them know exactly how and where this has occurred…
My husband and I had a less than pleasant experience with one of the loan officers (Steve Sager) with Monarch Mortgage in Virginia Beach, Virginia. Though we were pre-approved for our loan, it was later discovered that'd we'd have to wait another 12 months in order to close on our desired loan. But even before that determination had been made our loan officer was both inattentive and unreachable. He always seemed to make it a point to avoid our calls just after delivering unpleasant news about our loan status. Even our real estate agent received sub par results when she attempted to reach him on our behalf. Though our loan application was ultimately declined, we would have appreciated a notice from our loan officer, but he ducked that responsibility as well.
As it turns out, my husband and I are less than a year from being eligible to re-apply for the loan on our dream home. Perhaps its a blessing in disguise that we were denied, new home construction costs are falling as we speak. But rest assured, we will steer clear of Monarch Mortgage company in the future... they don't deserve the commission on a $350,000 - 400,000 loan.
Customer service comes first in my book, not the bottom dollar. My husband and I have always made it a point to reward good service, this loan officer has completely turned us off from Monarch Mortgage. I'm sure with our credit woes behind us and the home buying market slowly resetting itself we'll be in a prime position to take advantage of another great deal.
My wife and I were to close on our house on 8 May 2012. On the evening of May 3rd we were notified by the lender that the loan was not approved due to the bank not being able to obtain the 2010 tax transcripts. I had been told on the 1st of May by the bank the 2010 transcripts were not available. I spoke with the IRS and after 2 hours on the phone I was able to obtain the Wage and Earning Transcripts provided by the IRS. The IRS informed me this is how they verify my income. Why are there two different standards between the banking world and the IRS? Why does the bank refuse to accept the Wage and Earning Transcripts from the IRS, when the IRS only use the these same transcripts to verify my income.
I understand process, I retired from the US military in 2008, has anyone ever heard of Mortgage Company accepting the Wage and Earnings Transcripts instead of the 1040 Transcript?