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Banks Are Not Lending?, What A FALSE STATEMENT

By
Real Estate Agent 276682

I just wanted to take a moment to clear the air about something. I constantly am hearing that Banks are not lending! Seems that thanks to the media and all the doom and gloom news we keep hearing about when it comes to lending, everyone has the misconception that Banks are not lending and there is no point to even try to get a loan today. Well I can tell you that statement is POSITIVELY FALSE, FALSE, FALSE! Yup, that's right, it could not be further from the truth. Are loans a little harder to get today? Sure, if you consider the fact that lender's will actually do what they should have been doing all along, then yes loans are more difficult to get. So what is that they are doing to make loans more difficult to get? Well for starters you have to be able to verify your income. Go figure, we actually want to prove that you make the money that you say so that we know you truly have the ability to repay the loan! I don't think that there is any need for widespread panic on that one. I mean really, does anyone think it is a bad idea to verify a borrowers income through paystubs and a 2 year history of employment? If history teaches us anything, its that the banks should have been asking for this pretty much all along. After all this would have ensured most borrowers would have had the ability to repay, at least at the time the loan was originated anyway.

 

  The truth is that we are still lending everyday. The other truth is that there has never ever been a better time to get a loan or purchase a home. With prices at a historical low, and rates at the lowest lever we have seen in nearly 50 years, the time to purchase is RIGHT NOW! Recently I priced a loan that was able to actually get below 4% for a 30 year fixed term! (APR was 4.62%, loan amount of $110,000, there now the legal disclosures are covered) But with rates that low, and prices of homes at the lowest level in years, you will never have the opportunity that you have right now. So what makes it so hard to get a loan these days? The truth is not too much when compared to underwriting standards of years gone past. As a General guide expect to be able to answer and document the following.

1) Past 2 years of employment - a 2 year employment history is required. You will need to verify the income you received via tax returns and or W2's. In addition be prepared to show 30 days worth of paystubs.

2) Source of Down Payment - You should be prepared to supply 2 most recent months of bank statements, and source any large or unusual deposits. Gifts from family members are still OK. So if mom and dad or granda and grandpa want to help out and you have no funds of your own, that is still ok! Yup even today, you do not have to have your own funds to purchase a home, though the documentation process may be slightly different. Also Down Payment Assistance is still available, and is perfectly acceptable even if you don't have your own funds to put into the deal.

3) Credit- This is the big one where we can bust some myths. General consensus is that you need to have perfect credit. THIS IS FALSE! Although you must have decent credit, it does not have to be perfect. The most weight will be given to the most recent 24 months, with the strongest focus on the last 12. If you had credit issues in the past, but have taken measures to correct it, and have paid as agreed for the last 12-24 months chances are you still would qualify. As a general rule, most Lenders, and UW alike will require a minimum of a 620 credit score today. The nice part is, with the participation of HUD and FHA loans, you will not see a huge difference in rate between a 620 or 750 credit score. Not great news for the guy with the 750 as they wont see a huge improvement of market rate due to high score (although rates at less 4% are hard to improve on) for the guy with a 623 FICO its the best news there could have been in a decade. If you consider that a credit score of that nature will still receive a rate at about 4.5% (apr would be 4.78% on a loan amount of $115,000.00, there legal is covered again) That's about the cheapest financing that individual has seen in many years.

4) Residency - Be prepared to provide a verifiable 2 year residence history. If you have rental history and are detailed enough to keep your bank statements and or cancelled cheks, this will be a big help. This is especially true if there are credit hurdles from years gone past. If you are not that person, or have lived with mom and dad, do not fret many times that will be ok too. You may be asked to have mom and dad write you a letter that states you have lived there rent free, but if this is the end of the world to you, then you should probably re-evaluate your motivations.

In short, it is not terribly difficult to get a Home Loan today if you have your documentation in order, and you know what to expect going into this. It will only be difficult if you are trying to hide your income, paid under the table, or in cash and do not claim it on your tax returns. Same hold true with documenting assets, cash on hand etc. Provided you know what you will need in advance, and plan to document things accordingly your transaction will be fairly smooth and stress free.

You can expect that there will be more quality control processes in place than there were previously, we will typically verify your tax transcripts with the IRS to make sure you filed the same information you provided. You can also expect that it will take slightly longer to process your application. How much longer? In general, do not expect to close in 10 days, although on occasions we have been able to accommodate rush requests. Generally speaking plan for a 30 day process, sometimes possibly as long a 45 days to be safe. 45 days assures everyone that closing will take place on time, and that there is sufficient time for the lender to perform all the necessary quality control reviews that are required. This also assures buyers and sellers alike that closing will not have to be extended.

So now that you know LENDING DOES EXIST, RATES ARE lower than they have ever been, and the average home is selling for less the replacement cost of the materials to build it (at least here in Spring Hill Florida it is) What are you waiting for? Did you realize that you could be purchasing your home right now, and be paying less to own it month to month than you are for the little apartment you are in? Contact us today, and find out how easy this process can be!

Steve Fingerman

Branch Manager

www.Alliedhome.com/br3014

Allied Home Mortgage Capital

4117 Mariner Blvd.

Spring Hill Fl, 34609

352-688-7949 Office

727-946-0904 Cell  

Posted by

 

                                        Steve Fingerman, E Loans Home Mortgage

Steve Fingerman

President

NMLS #276682

E Loans Mortgage Inc

4117 Mariner Blvd

Spring Hill FL, 34609

Office 352-688-7949 Cell 727-946-0904

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Comments (3)

LaNita Cates
REMAX of Joliet - Joliet, IL

I hear WEEKLY "So I hear banks aren't doing any loans". I'm like "Really? I've had no problems with my qualified buyers." It's interesting what people hear (thru the media) because I haven't seen a problem with qualified buyers getting a loan.

Sep 01, 2010 09:59 AM
Mark Hitz
Keller Williams - The Colony, TX

I agree with LaNita's comments. If you are a quaified buyer no problem. 

Sep 01, 2010 10:20 AM
Steve Fingerman
Spring Hill, FL

Mark & LaNita, I have to agree with both of you. Qualified borrowers = No Issues, we still close them like clockwork. I think the issue is many who are actually qualified have come to believe that they can not get a loan today, and do not realize that they do not need to have "Perfect" Credit to be able to purchase a home. Around here there are plenty of sales that have occured at $35-$45 per square foot, some even less. That opens up a whole new world for the average hourly employee who is paying 500-600 per month in rent. They can literally buy a home for cheaper than rent. When you add in all the down payment assistance programs still available, they can do it for less out of pocket than what a rental would be.

Sep 01, 2010 10:58 AM