Getting a Loan Ain't What it Used to Be
April 23, 2009
Gone are the days when it seemed as though just being a human being made you eligible for the loan you wanted. As was the common joke, as long as you could fog a mirror, you could obtain a loan.
Not so today. Lenders want documentation. You will need to bring in your last pay stub before the loan can be funded. You will need to explain why your income has changed. Lenders seem to wish that all of us had government jobs and just one W-2 that confirmed our income. It is particularly difficult to obtain a loan if you are self employed. (We real estate agents see all these marvelous bargain priced properties, but, alas, we are self-employed.
If you have income from investments, you will have to provide documentation about which investments, how long have you held them and what is there current market value.
If you have other real estate holdings, be prepared to provide your last 3 years of tax returns documenting income and expenses from them. Also, how much equity you have and how many loans do you have. If you already have four or more loans, be prepared to have lenders decline giving you another one.
FICO scores matter and 700+ is almost mandatory. No more paying a higher interest rate for a low FICO. You are just declined. Credit matters. You are better qualified for some mysterious reason if you have a bunch of credit cards that are all paid current with no late charges, One credit card may raise a flag to the underwriter and it may be necessary to obtain a second card and use it before you will be able to obtain a real estate loan. Crazy? Yes, but lenders are really scared. If the market should continue its downward trend, they want borrowers who are conscientious about paying their bills and paying them on time. Without a track record, they would just as soon hold onto their monies.
The government wants the lenders to make loans, and the lenders want to make loans, they just want to only make them to the folks who almost don't really need them. However, to purchase a home, most folks need a loan.
Gone are the days when it seemed as though just being a human being made you eligible for the loan you wanted. As was the common joke, as long as you could fog a mirror, you could obtain a loan.
Not so today. Lenders want documentation. You will need to bring in your last pay stub before the loan can be funded. You will need to explain why your income has changed. Lenders seem to wish that all of us had government jobs and just one W-2 that confirmed our income. It is particularly difficult to obtain a loan if you are self employed. (We real estate agents see all these marvelous bargain priced properties, but, alas, we are self-employed.
If you have income from investments, you will have to provide documentation about which investments, how long have you held them and what is there current market value.
If you have other real estate holdings, be prepared to provide your last 3 years of tax returns documenting income and expenses from them. Also, how much equity you have and how many loans do you have. If you already have four or more loans, be prepared to have lenders decline giving you another one.
FICO scores matter and 700+ is almost mandatory. No more paying a higher interest rate for a low FICO. You are just declined. Credit matters. You are better qualified for some mysterious reason if you have a bunch of credit cards that are all paid current with no late charges, One credit card may raise a flag to the underwriter and it may be necessary to obtain a second card and use it before you will be able to obtain a real estate loan. Crazy? Yes, but lenders are really scared. If the market should continue its downward trend, they want borrowers who are conscientious about paying their bills and paying them on time. Without a track record, they would just as soon hold onto their monies.
The government wants the lenders to make loans, and the lenders want to make loans, they just want to only make them to the folks who almost don't really need them. However, to purchase a home, most folks need a loan.
posted by shirley harry at 8:42 PM
0 Comments:
Post a Comment
<< Home