Tim Halladay talks about major mistakes borrowers make that can stop them in their tracks!
Part 1 – 28 minutes
Part 2 28 Minutes
Every lender needs to know you are qualified. Underwriting guidelines are designed to verify your Credit, Income, Assets and the Collateral the lender will lien. If you are not prepared and don’t have the information the lender needs, you could find yourself stopped dead in your tracks!
Credit – Know what your scores are AND how they are determined. Mistake – bad credit!
35% of your score is your payment history. Are you ontime?
30% is your credit use. What percentage of available credit have you used? Have you maxed out any credit cards? Even if you have a card with small balance, if it is close to the limit you could be damaging your scores!
15% Time accounts open shows the depth of your credit experience. If you have managed your finances properly for ten years you will be more attractive than a borrower with only 12 or 24 months of experience
10% Credit mix or Account Diversity – Installment payments like auto loans or student loans plus some revolving credit like credit cards will show a more diverse experience with credit and improve your score.
10% Search for New Credit or Inquiries – Who are you seeking credit from and how often. The more you shop for credit the lower your score will be. However, every industry and every credit bureau has windows of time when you can shop for services without be penalized multiple times. For example, if your shop for an auto loan from 3 different lenders within a week you will lilely only be hit for that credit pull one time. The bottom line is only apply for new credit when you need it, not for 5% off a $50 purchase!
Income
If you receive wages and get a W-2 at the end of the year – this part is easy! If not, you need to understand how the underwriter is going to calculate your income. There are literally hundreds of permutations of income types and documentation rules, but if you follow these guidelines you should be okay. To use the income you need a two year history of receiving it and three year liklihood of continuance. The underwriter is looking for your Adjusted Gross Income. Mistake – not understanding how much you make or over calculating it!
Assets – This is the category that has become the most difficult to deal with, when it should be the simplest! Depending upon the loan program you will need to prove that you have the right amount of money AND where it came from. The lender needs to see a 60 day history of your bank account. EVERY deposit that is larger than 50% of your normal paycheck must be verified. If you are not prepared the money in your account could be ignored by the bank!
Mistake – Not documenting EVERY deposit from an allowable source. Unacceptable sources include CASH, gifts from friends, sale of any property that you cannot document ownership, value and sale of property, unsecured loans. The bottom line is ASK your lender!
Mistake – Not correctly documenting your gift from an allowable source. The lender will ask the gift donor to prove they had the ability to give the gift. That means your parent, aunt, grandparent or other closely related gift donor must show YOUR lender a one day “snapshot” of their account including their balance. Some donors feel this is a violation of their privacy, but it’s the rule!
Mistake – Providing transaction history printouts from your home computer. The ONLY acceptable bank account documentation is a full bank statement with all pages, OR a printout from your bank that has been signed and stamped by your bank. A printout from your computer at home will not include any identifying information and will not be accepted.
Mistake – For those embarking on a lease with option or land contract these asset rules can make or break the whole deal!!!
Listen to Tim’s broadcast for all the details! If you live in Malta, Saratoga Springs, Albany, Troy Schenectady or anywhere in NY State Tim Halladay of Victory Funding can help you get the right mortgage at the right rate with low fees! Contact Tim Halladay for more info!
