POTENTIAL OBSTACLES TO GETTING A LOAN AND IDEAS TO OVERCOME THEM.
Check Your Credit Rating Before You Apply for a Loan
You may have derogatory credit on your credit report and not know it. It might help to order your credit report to find out what is there and give yourself time to correct mistakes and, if necessary, improve your creditworthiness. Preferred Home Loan, Ltd.can do this for you if you would like us to.
Reduce Your Debt
Being overextended may work against you when you apply. Keep your car(s) for a few more years. Consolidate outstanding balances at a lower interest rate. Take the time to pay down your debt before you apply for a loan.
Ask a Parent or Relative to Co-Sign Your Loan
If your credit and assets are a little shaky, a lender may be more accommodating if an established parent or relative co-signs your loan.
If you Don’t Have Money to Put Down Look for Foreclosed Properties
If you are a do-it-yourself type you may want to consider buying a foreclosed property. You might have to put in some extra work to repair the property, but you could get a good deal. Lenders and government agencies (such as FHA and VA) are often willing to ease credit guidelines to sell their properties. If you would like to search for a foreclosed property, go to www.pasreo.com. You might also want to call FHA or VA directly.
I Believe I Do Not Have Good Credit
There are loans available for those who have experienced past credit problems. The amount of down payment, interest rate and loan programs are based on the borrower’s credit scores. It is recommended that you talk with a Loan Officer at Preferred Home Loan, Ltd. to determine which loan programs are available to you.
BACK TO TOP
INFORMATION NEEDED FOR LOAN APPLICATION
General Information
- Home address (es) for the previous two years
 Social Security Number(s)- Employment information - previous two years including employer name, address and phone number
- Income information - salary, overtime, bonuses, commissions, dividends, interest, retirement and any other source of ongoing income
- Liquid assets - bank name, account type, balance, and source of down payment
- Other assets - value of bonds, stocks, life insurance, retirement funds, jewelry, automobiles, etc.
- Liabilities - creditor names and outstanding balances for all
- Other Debts - notes payable, 401 (k) loans, life insurance loans, stock pledges, alimony, child support, co-sign loans, credit union loans, and other liabilities
- Real estate owned - property address, market value, outstanding liens, rental income, mortgage payments, taxes, insurance and maintenance dues
Property Information
- Purchase contract
- Planned Unit Development (PUD), condominium or co-op -Name of development or project
- Phone number of the homeowner's association (if available)
- New construction: Year land or lot was acquired, Original cost of land/lot, Amount of liens, Estimated cost of construction
- Refinance loans: Year property was acquired, Original cost of the home, Cost of improvements, Amount of liens, Description of improvements
Application Fee - $400.00
BACK TO TOP
BENEFITS OF PURCHASING
Build Wealth
As the value of your home increases your equity grows. Because you pay down the principle on your loan with every payment, this also grows the equity in your home.
Tax-deductible borrowing
As you build equity, you can borrow against it and, in most cases, deduct the interest from your taxes. Make sure to consult your tax advisor. This gives you access to money for college tuition, home improvements and other big-ticket expenses.
Lower your taxes
Homeowners Insurance is NOT deductible, but Property Taxes are! Consult your tax advisor.
BACK TO TOP
WHAT IS TYPICALLY CONSIDERED WHEN YOUR LOAN IS BEING UNDERWRITTEN?
The items listed below are the typical guidelines on a conventional loan and apply to most loan types. But, there are other loan programs that have different guidelines. Also, it is important to note that these are guidelines, and not necessarily hard-and-fast rules. Lenders may be more flexible or more strict depending on the overall quality of the loan application.
Income Stability
All Income should be verifiable for a period of 2-years. Common types of income in addition to salary, include investment interest, commissions, royalties, social security, disability and alimony payments.
Debt- To-lncome Ratio
Most loan programs call for a housing expense ratio of no more than and housing expense of no more than 28% of your monthly pre-tax income. Housing expenses usually consist of principal, interest, taxes and insurance (PITI), but can also include maintenance. Your housing expense, plus other debts should not exceed 36% of your monthly pre-tax income. Other debts include credit card balances, installment loans, etc. If you would like to see what loan amount and payment you can qualify for, you can use our mortgage calculator on this site. Or, call one of the loan experts at Preferred Home Loan, Ltd..
Credit History
A lender wants to know if you make your obligated payments on time. It's a good idea to check your credit report before you begin the process in order to correct any errors or to improve your creditworthiness. Preferred Home Loan will provide this service for you.
Loan to Value (LTV)
The loan to value (L TV) is the ratio of your loan amount to the value of your property. This ratio tells a lender how much equity you will have in your home. The higher your equity and the lower your L TV, the larger your stake in the investment and the less risk there is for the lender. For example, a LTV of 80% means that you are putting 20% down and borrowing 80% of the property's value. Borrowers with less than 20% equity are general required to buy Private Mortgage Insurance (PMI), which protects the lender in case of loan default. Loan-to-value guidelines are determined by the borrower's circumstances and the type of loan. Some loan programs require an investment of as little as 3% of the property value.
Property Appraisal
This is a professional assessment of your property by a licensed appraiser to make sure that its market value is sufficient for the loan amount. A lender needs to know that the borrower's collateral (property and down payment) will cover the loan amount in case of default. A good appraisal also assures you that you are paying a fair market value for your home.
BACK TO TOP
THINGS TO CONSIDER WHEN DECIDING TO BUY A HOME.
Your Overall Budget and Monthly Cash Flow
In addition to your potentially sizeable housing expense, you'll need to set aside some money for the one-time big-ticket purchases that come with home ownership. Things like Window shades, appliances and furnishings can all add up. And what about moving cost! Make sure you leave yourself enough cash after your down payment.
Also, if you are moving from an apartment to a home, remember that you will have higher expenses associated with repairs of that house. If you are moving from a smaller home to a larger one, make sure that you have budgeted for higher utility bills and maintenance expenses.
How Long Do You Expect to be in Your Home?
The length of time that you plan to live in the home affects your down payment and closing strategies as well as the type of mortgage you choose. For example, if this is your first home, you may plan on living there for less than five years. That being the case, you might want to get a five year ARM, to take advantage of the lower rates that program offers. Also, if you are not planning to stay in the house very long, it might make sense to put down a smaller amount.
How of a Down Payment Should I Make?
The down payment impacts the lender's approval decision, loan amount, mortgage type, the size of your monthly payments, your mortgage interest rate, and the cash you have available for other moving/furnishing costs. So, consider your down payment carefully.
Putting down a larger down payment does several things for you. The more you put down the less you'll have to borrow. This means that you will have lower monthly payments and lower overall mortgage costs. You will start out with more equity in your home. This also makes it easier to qualify for a loan.
But, you may want to consider putting down less money, for several reasons. It may be true that a smaller down payment will cost you substantially more in the long run, but it will increase your current cash flow. However, if you expect an increase in your future earnings, more down payment may be the way to go. Also, you need to have enough cash after closing on your home to pay for moving expenses, and to buy things like window coverings, furniture and all of the other unexpected expenses of moving into a new home. Either way, make sure you understand the tradeoffs before you devise your strategy.
Should You Work With a Real Estate Agent?
A real estate agent helps by knowing the neighborhood, directing your search, they can scout the market for properties you can afford that meet your requirements, accompanying you on viewings, and acts as a liaison between you and the seller. They can also make sure that your draw up a contract that is legal and binding for the state in which it is being purchased.
BACK TO TOP
|
