In most cases when you bake a pie you use a certain recipe and you make sure you get all the ingredients correct, that would be those that you need and in the correct amounts.
well
A little while back I saw an article published by "constantly negative news," previously known as CNN. The gist of the headline was that a potential homebuyer with a 800 credit score was denied a loan. I'll touch on the lack of truthfulness in regards to the score in a minute, but my first bone of contention is
that a mortgage application is not approved or denied solely based on the credit score, that there are other ingredients. Should I mention that it is more than just a little irresponsible to insinuate that all that is necessary is a good score. I guess I won't.
Mortgage Pie; basic ingredients
credit, income, assets, job stability, property quality
also at times there may be other ingredients necessary.
like pies, not all borrowers are the same.
Here's a simple statement, which in general sums up credit;
make your payments on time
In the CNN article they stated that the "self employed borrower" had an 800 score. He did have one of those but also a 760 and a third lower score. Lenders throw out the high and the low and use the middle. Shame on the writer.
income;
in todays marketplace you are going to have to substantiate that you have sufficient income, a track record of earning income at these levels, and prove that it is likely to continue at at least the current levels. For self employed borrowers the standards will be tougher.
assets:
you can still get low and no downpayment loans, but it is helpful when you can show that you have some cash reserves, or have saved funds, to at least make minimal downpayments.
I chuckle, inwardly, when I hear a potential buyer state that I paid x amount in rent, so i should be able to afford the same amount in a mortgage payment.
noooooooooo, not so fast.
when something broke previously the landlord paid to have it fixed, now as the homeowner you will.
develop a savings plan.
job stability;
to a certain degree this goes hand and hand with income, but continuous employment in the same industry is helpful, and if you recently changed from being a W2 employee to commission, or self employed you'll need some time.
property quality;
that's the security,
I don't care if the contract says "as is," it also says that it's contingent on mortgage financing, and we have our own rules on property quality. Here's a pertinent question
is the property mortgagable with the type of financing requested?
Okay, so there's the basics, now
mix, don't leave anything out
bake (process)
cool
and close.
Comments(0)