Tuesday, July 18, 2017

The 3 Factors That Sway Your Application for a Mortgage Loan

If you’re applying for a mortgage loan, there are three things lending professionals look at to determine whether you’re approved or not.

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When applying for a mortgage, there are three main factors that get taken into consideration. As I like to say, banks like to go “CIA” on you when you apply for a mortgage, and the “CIA” stands for these three factors: credit, income, and assets.

Credit is important because it will determine whether you qualify for a loan or not. Your first step, then, should be to get credit-qualified. All this means is a verification that your credit is good—don’t confuse it with a full qualification.

When people come into my office, we tell them they’re either credit-approved or credit-denied. When you’re credit-approved, it just means your score is high enough to apply for a mortgage loan. When you’re credit-denied, it means your credit scores are not quite where they need to be.

If you’re credit-approved, the next thing to look at is your income, or how much house you qualify for. In order to know this, we analyze all the different forms of income you have. Keep in mind, we can’t use money you make and collect in cash—we need income from verifiable sources.

If you have a job, we can use your regular W-2 income. Typically, you only need a two-year work history, and we would use your regular salary in that case. The second type of income we use is self-employed income. If you’re self-employed and own your own business, we’d use your tax returns for the past two years. This includes your 1099s and your write-offs, so make sure you file your taxes properly. If you’ve done a lot of job-jumping or you work multiple jobs, you don’t need to worry as long as we can document what your current pay is and you stay put during the mortgage process.

Once these three factors are settled, that’s when you become fully approved.

If you have social security or disability income, you can qualify for a house as long as that income is stable and likely to continue for the next three years. We can also use child support and alimony as sources of income. In the case of child support, the child you’re claiming it on must be receiving it for three years into the future. In other words, if your child is 17, we probably won’t be able to use your child support as qualifiable income.

Finally, we examine your assets to see how much of your down payment they can cover. Don’t believe the myth that you need 20% down to buy a home. However, you will probably have to pay some kind of down payment and/or have some closing cost money available. In many cases, these can reduce your cash to close. Typical loans start at 3% down unless you’re a veteran, in which case you can get a loan for zero money down.

The types of assets we can use include a gift from a family member, the money you saved up as your own, a gift of equity (if you’re buying from a family member), or down payment assistance or tax credits.

Once these three factors are settled, that’s when you become fully approved. If you have any questions about applying for a mortgage loan, feel free to give me a shout. I’d be happy to help.

Wednesday, May 10, 2017

We've Joined Forces With AmCap

Today I have some big news that will allow us to help you and your borrowers on a whole different level.

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I'm excited to announce that our company was recently acquired by AmCap, a much larger local bank here in Houston. We'll transition to a new company, but I wanted to be sure you knew that we'll still have the same great team of people for you to work with.

We have more products to give you even better service and more options for your borrowers.

We'll have the same great underwriters, closers, and service. The great news is that we have more products on the way to give you even better service and even more options for your borrowers. New offerings will include:

  • Reverse mortgages: This helps your buyers older than 62 buy a home or refinance.
  • Non-QM loans: These are for buyers who don't qualify for traditional financing, like self-employed people who can't prove their income.
  • Jumbo loans up to $1.5 million with only 10% down.
  • FHA loans for borrowers with credit scores as low as 580 or 600 for VA loans, and 620 for USDA conventional loans.
  • 203(k) loans that allow up to $35,000 for home repairs or escrow hold-backs for minor cosmetic issues up to $4,999.
  • Manufactured housing loans: They go off agency guidelines as long as the property is a double-wide.
  • One-time close construction loans: This lets us help you buy land and build a house all in one loan with no need to refinance later.

If any of your buyers are looking for these products or you have any other questions about how this move can help you, don't hesitate to give me a call. I look forward to talking with you soon!

Friday, April 21, 2017

Do You Really Know How Your Credit Score Is Calculated?

When it comes to your credit score and your credit report, here are a few key things you need to understand.

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How does your credit score work? How can you understand your credit report?

Your credit score is calculated based off of many different factors. The first time you get a credit score is the first time you open an account. That first account may be paid on time, but you’ll still start off with a lower score. This is because there are many factors that encompass a full credit scoring model, like how many accounts you have, what type of accounts they are, how long you’ve had the accounts, and how you choose to pay off your bills.

When it comes to these different factors, there are a few key things you need to know.

Regarding the average age of your accounts, the higher the better. If you open up a brand-new account, your credit score can drop not only because you got hit with an inquiry, but the average age of your accounts also dropped. That’s why if you have accounts that you’ve had for years—like credit cards—you don’t want to close them.

What about payment history? As I always say, credit is king, and if it reports to your credit bureau, it gets paid before anything else. Even if you pay all your bills on time but are late on a $20 payment, your credit score can drop 100 points. Why? From the perspective of the credit bureau, if you can’t pay $20 on time, you either don’t care or you’re so strapped for money that you can’t afford to. Falling behind on a small debt is just as detrimental to your credit as falling behind on a big account.

Now that you’re paying your debts on time, are you just making the minimum payments or are you paying more than that? Credit bureaus examine trended data, which means they evaluate your credit report to see if when your credit bill is due every month, you’re paying the bare minimum, you’re paying more than that, or you’re paying it off completely. The more you pay over your minimum amount each month, the better your credit score will look.

Limit the number of accounts you have and limit the number of inquiries you have.

Do you have to have 100 accounts out there to build credit and improve your account quality? No. In most cases, to have a good, healthy credit score, you want two to three revolving accounts or installment accounts. The more credit you have, the younger the average age of your accounts is and the more accounts you have to pay. This is why it’s always good to get major credit cards that you can use anywhere, like American Express, Visa, and Mastercard so you can increase your limits over time. The higher the limits are on your credit cards, the better your credit score will be. Instead of 20 cards with a $1,000 limit for each, strive for just two cards with a $10,000 limit for each.

Lastly, remember that whenever you apply for credit, every inquiry drops your credit score. It’s not like shopping for a mortgage loan where you can get multiple inquiries and they all count as one because lenders know you’re not buying three or four houses at a time. Limit the number of accounts you have and limit the number of inquiries you have.

If you have any questions about your credit score or the credit scoring model, give my team a call or reply back to this email. We’d be happy to help!