for realtors who discuss general financing questions with their clients

Brush Fires … A trouble-shooters guide for Realtors and Agents who discuss general financing questions with their clients. By Sean D. Cohen Prosperity Mortgage Consultant; Oceanfront Long and Foster Office. Here’s a list of typical “brush fires” that we can recognize early, and save everybody from the heat! And remember, loan officers aren’t underwriters, so you can tell me anything, that way I can help structure the loan to meet your client’s needs. Undisclosed or New Debt: New cars, new furniture, child support, alimony, allotments, daycare, and new credit cards. Mattress Money: Big deposits look like you got a loan that the bank doesn’t know about. Gift money from relatives must be documented with those relative’s bank statements! Big Money Transfers: Shifting money betw. accts can confuse/worry lenders. Maxing Credit Cards: Clients can change their credit/debt profile by running up cards after application/preapproval Pushing the Limit: Preapprvl. amounts shouldn’t be pushed to the max due to estimates. Too Many Credit Inquiries: Every hit lowers a score 2 pts. Car dealers are the worst. Unwarrantable Condo’s: Too many renters in a complex can affect the loan program. Bad “Pre-Quals” from Lenders: Some lenders do weak reviews of client’s credentials, and give you a letter for your client’s that doesn’t “hold water”. A pre-qual is not the same as a pre-approval. Make sure the loan officer checked their credentials properly. Divorce Decrees: Debts paid by divorcees may still count against everybody. Home Inspections: Get ‘em early on, before appraisals, and put out the fires, if you can. Termite Inspections: Get ‘em early on, “ “ “. Allowances on Contracts: Most banks/loan programs allow seller contributions for closing costs and prepaids, but not other allowances, like carpet, roof, etc. Depleting Funds: Some banks re-look at savings accounts before closing. Tell your clients not to spend what they’ve shown on paper, at least until after closing the loan. Jumping Through Hoops: Home loans are “big” money. Your clients should expect to have to retrieve certain documents and credentials from previous transactions. All recent debts/collex that are now “paid off” will require a paper trail. Prep your clients for this. Also tell them not to “pack up” their old loan and tax documents. Paying Off Revolving Credit: Credit cards are not viewed like car loans. Clients must actually payoff and close cards for them not to count against their debt ratio. Quick Debt Ratio Guide: Most banks/loan programs allow debt ratios in the low-to-mid 40% for all outgoing loans and credit cards, including the new house payment. So if you take the client’(s) gross monthly income, multiply by .44%, and then subtract their car loan(s), credit card minimum payments, and any child support, alimony, or student loan payments from that, you end up with a piti house payment they can afford on paper. Here’s a general chart for house payments equal to how much house/condo/townhouse that payment affords: 1000/mth piti: $140,000 2000/mth piti: $275,000 1200/mth piti: $165,000 2300/mth piti: $305,000 1400/mth piti: $190,000 2600/mth piti: $345,000 1600/mth piti: $215,000 2800/mth piti: $365,000 1800/mth piti: $235,000 Also remember, you can add large down payment money to the above price of the house.