The Big Five:
Assets
Credit Score
Ratios
Down Payment
Employment
1. Assets:
Interested in liquid assets (assets that can be turned into cash immediately)
Want to see money you have in the bank that you can count on (looking for regular deposits)
Large deposits can be red flags (winning at the casino… not money we can count on)
3 things your loan officer will ask of you:
2 months of bank statements (all pages, even if blank!)
30 days of pay stubs:
If you get paid 2x/month you will need 3 pay stubs
If you get paid every week you will need 5 pay stubs
W2’s for the last two years (include every job you’ve had, with contact information)
If commission: will need taxes for last two years (all pages, yes even the blank ones), you may need business returns
If going by W2s they look at gross income, if going by commission they look at net income
They want to see two years of steady income or a student who then obtained employment in their field (if a student you will need to provide transcripts and a diploma/degree)
2. Credit Score:
Can be the most important factor of the five
640: typically the lowest lenders will accept (on occasion they may accept 620 if the other four areas are strong)
740+ is considered excellent, best of the best (anything above 740 will get about the same rate as 740)
How to you fix credit? Pay off debt and give it time
2/3 of score is based on paying bills on time (30 days is considered late)
Credit Bureau looks at: (they will look at other bills if they go to collections)
Mortgage (most important)
Car payments (or other means of transportation like boat, motorcycle, etc)
Credit Cards (want to show activity/”revolving debt”: using credit cards, paying them off, not having more than 30% of limit used)
It is good to show history as well, want to pay the oldest credit card down first, and then pay a little off of each credit card versus just paying one completely off
Don’t want to close out credit cards… good to show history of revolving debt (if done smartly)
Student Loans
3. Ratios:
DTI: debt to income ratio
How much do you owe a month/how much (gross) do you make a month?
32% is good
40-42% is a gray zone
50%+ not likely you will get a loan (need to lower expenses or increase income)
4. Down Payment:
VA: 0%
Rural Development Loan: 0% down (income has to qualify, can’t make too much)
OH/KY bond programs
Conventional Loans:
20% down is the best…no PMI
Other Convention Loans: (with PMI)
10%
5%
FHA: non-conventional, 3.5% down, allows greater ratios, lower credit scores
Money for down payment can be gifted, but there needs to be proof of funds on both sides and a gift letter stating that you do not have to pay the money back
5. Employment:
Want to show 2 years of reported income
This can include:
Changing jobs within the same field
A student who then obtained employment in his field
If laid off for 3 months and then obtained employment in same field… this would be okay (3 months is typical for finding new employment)
You want to get a preapproval letter as soon as possible!!
留言