Hot Tips for Home Buyers!

What Lenders Look for in Home Loan Applications

The 3 C's....

Ø   Credit

·         What are the FICO scores?

·         Are there any Judgments, Collections, Late Payments?

·         Quantity and Quality of the credit tradelines

Ø  Capability

·         Job stability and history

·         Salary versus commission/bonus income

·         Deductions

Ø  Collateral

·         Liquid funds – checking, savings, stocks, etc

·         Non-liquid funds – 401k, retirement

·         Gift funds

Avoid changes to your financial profile

Remember, lenders are looking for stability in all these categories. 

Ø  If you buy an expensive car with a loan that will affect your budget and your ability to repay a mortgage.  It can also negatively affect your scores.

Ø  Any large deposits and transfers of funds into your banking accounts have to be sourced.  It is important to document all deposits (I would say any deposits over $1000). 

Ø  Changing jobs/employers is typically done to benefit and increase your earnings and is an obvious change.  However, the lender can have additional requirements you will need to follow.  If your pay structure chanes (more commission based than salaried, or salary to hourly) this can affect how they will qualify your capability to repay the loan.

Shopping For the Right Mortgage

There are many different types of loan options available in the market.  There are fixed rates, adjustable, interest only, government, etc.  It is important that the mortgage consultant is able to explain what loan options you qualify for based on your application.  There are some important questions to ask in addition to completing an application that can help assess your strategy as well.

Ø  How long to you anticipate living in the home?

Ø  Do you expect any changes over the next several years, such as expanding your family?

Ø  Do you expect any changes in income due to promotions, relocations, retirement, and inheritance?

Ø  Are you conservative with your investments strategies?

The most important part is communication.  The home loan applicant has to communicate with their mortgage professional any changes, good or bad.  The mortgage professional has to communicate the process and programs to the home loan applicant.  This is one of the largest financial transactions most people will ever experience in their lives. 

For more information, contact:

Eileen Horan
Mortgage California
Ph: 650.645.1775 / M:831.566.9908/ EFax: 408.335.2474 eileenhoran@mortgagecalifornia.com