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Carver Communications - Index

Carver Communications - 1.1.09 - Index

Vol.XXVII, No.1 © Carver Communications, Inc. January 1, 2009
How To Help Your Client Get A Mortgage - #101
By Brad Vialpando
Another year is drawing to a
close. A year of turmoil in the financial
sector sparked by the devastating crash of
the housing market across most of the US,
that has now spilled over into almost
every other industry in the country. A year
of foreclosures, layoffs, bailouts, and
elections………..a year that quite frankly
wasn’t that bad for San Antonio compared
to the rest of the country.
And as this tough year comes to an
end, a new year begins. A new year of
hope, a new year of “change”, a new year
of buyers, and for the purposes of this article
a whole new year of first-time homebuyers
is now upon us.
But with all that’s been in the news
lately about the dreaded “Credit Crunch”,
how on earth does anyone qualify for a
loan these days? Well, believe it or not the
answer is quite simple………..they qualify
the same way they always have; by
assessing their ability (income/assets) and
willingness (credit score) to repay their
debt.
That’s right; even though sub-
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San Antonio, Texas 78265
prime, stated-income, and almost every
other niche loan product has been taken
off the market we can still do loans the old
fashioned way. And if your client has
never applied for a mortgage before, they
may not realize it yet, but they’re about to
have every crevice of their financial life
looked over by banks who will consider
them for a loan. They’d better make sure
their financial house is in order.
Determine How Much Your
Clients Can Afford
This is the most important yet often
overlooked and misunderstood step.
Clients can start by looking at how much
they currently pay for rent or mortgage. Is
it hard to make ends meet at the current
payment or are they living comfortably
and feel that they can afford to spend more
on a monthly basis? Have they been able
to set aside money for savings or investments
at the current monthly housing
expense? If so, then they are probably
ready to move up to a larger monthly
mortgage payment. If not then they
should probably look into a home that will
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cost less than the current payment.
Okay, now that we understand a little
bit more about what they are willing to
pay, how does that translate into what
sales price they should be looking at? As a
rule of thumb for homes here in San
Antonio, the monthly mortgage payment
with taxes and insurance included should
be about .9% of the sales price of the
home. For example: A $100,000 home
will cost around $900/month, a $200,000
home will cost around $1800/month, and
a $300,000 home will cost around
$2700/month, etc…..Of course these figures
will vary depending on loan type,
interest rate, down payment, location of
the home (taxes), and actual cost to insure
the home.
(Please keep in mind what the
client’s willing to pay and what the bank
thinks they can afford are quite often very
different.)
Check Out Credit Report and
Score
Start the search by having them
order a copy of their credit report and
finding out the credit score. If they’re
worried that the score is looking kind of
low (below 580), don’t worry, there are
some ways that can boost the score in a
relatively short time. Just understand that
“a relatively short time” in this case
means months, not days. Which goes to a
bigger point: Clients thinking about buying
a home should give themselves three
to six months to get everything in order.
Pull Together the Financial
Records and History
Clients are always amazed how
much paperwork is involved with getting
a mortgage. Remind them they’ll be asked
to supply tax returns from the last two
years, W-2’s, pay stubs, bank statements
and other bits and pieces of information.
Start gathering that info now, well before
they even apply.
Collect and Deposit Family Gifts
as Soon as Possible
A lender will view gifts from family
members differently than savings diligently
set aside over time. If it’s feasible,
have clients deposit any contributions
from other people to the housing fund at
least two months before applying for a
loan. That way, when the lender goes over
the last few bank-account statements
those funds will already be seasoned.
Get Pre-qualified
It’s always a good idea to get prequalified
for a mortgage if buyers haven’t
found the house yet (if they have found a
place, then they can just go ahead and
apply for the mortgage). What pre-qualification
means is that a lender has checked
the credit and verified that they make and
owe what they said they make and owe.
The lender will also issue a letter that can
be provided to brokers and sellers, indicating
that the bank has agreed to lend a
certain amount of money.
There are two big benefits to getting
pre-qualified: It shows sellers that
buyers are serious, and it gives a head start
on the mortgage application process.
Maybe even more important, it can
save “finding the dream home, falling in
love with it, and then not being able to get
the loan.” Save them the heartache, get
pre-qualified before looking.
(Save and give to your next buyer)