Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010
NMLS ID 143960
You need income. You need to be able to afford the home. Without it, forget it! But what is acceptable income? Basically, it all depends on the type of loan that a borrower applies for. Jumbo, V.A., USDA, FHA, Conventional, Kentucky Housing KHC Super Jumbo? Letâ€™s just say that there are two ratios:
First Ratio â€“ The first ratio, top ratio or housing ratio. Basically that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment. The housing payment consists of Principle, Interest, Taxes and Insurance. Whether you escrow or not every one of these items are factored into your ratio. There are a lot of exceptions to how high you can go, but letâ€™s just say that if your ratio is 33% or less, generally, across the board, youâ€™re safe.
Second Ratio- The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has. So, it includes housing payment as well as every other debt that a borrower may have. This would include, Auto loans, credit cards, student loans, personal loans, child support, alimonyâ€¦.basically any consistent outgoing debt that youâ€™re paying on. Again, if youâ€™re paying less than 43% of your gross monthly income to all of the debts, plus your proposed housing payment, thenâ€¦â€¦generally, youâ€™re safe. You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.
What qualifies as income? Basically, itâ€™s income that has at least a proven, two year history of being received and pretty high assurances that the income is likely to continue for at least three years. Whatâ€™s not acceptable?????? Cash income, short term income and income thatâ€™s not likely to continue.
For the most part this is fairly simple. Do you have enough assets to put the money forth to qualify for the downpayment that the particular program asks for. USDA says that there can be no money down. FHA, for now, has a 3.5% downpayment. Some loans require 20% down. These assets need to be validated through bank accounts and sometimes gifts. Can you borrower the down payment? Sometimes. Generally if youâ€™re borrowing a secured loan against a secured asset you can use that. But rarely can cash be used as an asset. TALK TO YOUR LOAN OFFICER FIRST when discussing whatâ€™s acceptable?
Whewwwwwwwwwwwwwwwwwwwwwwwwwwww. This can be the bane to every borrower, every loan officer and every lenderâ€¦â€¦and yes, to every realtor. How many times has a borrower said my creditâ€™s good, only to find out that itâ€™s not nearly as good as a borrower thinks or nearly as good as the borrower needs. Big stuff for sure. 640 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then youâ€™re in a world of hurt. Even at 640, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 700 is when you really start to get in the â€œas a lender we love youâ€ credit score. 720 is even better. Watch your credit!!!!! Check out my post:
Kentucky Housing VA FHA KHC USDA and FNMA all require 640 credit score!
In many ways this is the easiest box. Why????? Generally, thereâ€™s nothing you can do to affect this. Bottom line here isâ€¦..â€is the value of the house at least the value of what youâ€™re paying for it?â€ If not, then not good things start to happen. Generally youâ€™ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing. The big issue comes in refinancing. In purchase transactions, the value is determined as the
Lower of the value or the contract price!!!
That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000. Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000. Big issuesâ€¦.Talk to your loan officer.
Gabino Barrera Jr.
23705 Crenshaw BLVD. Suit 101
Torrance, CA 90505
License by the State of California Department of Corporations under the California Residential Mortgage Act
Good luck to you,
Unwavering Commitment to Service, Unsurpassed Results
The reason you want to be pre-approved and have the LO review all of your docs before making an offer is so you do not lose money on inspections and an appraisal. Those are expensive mistakes if you canâ€™t close the deal, good luck,
Philip J. Cunningham REALTOR
V.I.P. Realty Corp
7942 Bustleton Ave
You get a pre approval to determine what price point you should be shopping in and to include in your written offer to the seller. List agents require a pre approval be included so that your offer is deemed viable. If you wish to be taken seriously by a buyers agent, a sellers agent, or a seller you need to be pre approved. It is in your best interest.
Once you have gotten a pre approval and have written an offer on a property that has been negotiated and accepted by all parties you are going to conduct a home inspection. If you are purchasing your house with a mortgage the bank also has the house appraised. At both the point of inspection and appraisal issues may come up that prevent a lending institution from deciding to invest in the property. They may decided the property is unsafe, or does not meet its financial criteria. Would you lend your teenager $5000.oo to buy a car without you seeing it? No, and the bank works the same way. They want to be sure that their money is going to be secure.
You are in need of a knowledgeable buyers agent that will answer your questions fully and guide you in the home buying process. It does not cost the buyer to secure his or her own agent, the seller pays both agents from the agreed upon commission when a property is listed.
If you decide you want more information or if you decide you want a buyers agent feel free to contact me at firstname.lastname@example.org
Coldwell Banker Preferred
From your question, it sounds like the buyer was pre-qualified. Pre-qualifications are normally based upon "stated" information to the lender.
Stated information is what it sounds like...the buyer told the lender various financial details without the lender receiving verifying documentation.
Pre-approvals are normally based on documentation submitted to the lender that will meet the criteria of the processor and underwriter.
This is a much stronger letter and assessment because the lender is basing the buyer's ability to afford a mortgage on the provided documentation.
First a few reasons, then a comment on the bank possibly denying you:
1. No good Realtor is going to spend their time or gas to show you around if they do not confirm that you are qualified first.
2. It is not ethical for us to show other agent's listings if you are not qualified as it is an inconvenience to the Seller to be out of the house during showings.
3. Most importantly, it is a waste of YOUR time.
The trick to not being denied in the future is simple: ask your Realtor for a few names of REPUTABLE mortgage brokers who will give you an honest and realistic prequalification/preapproval. There are many different "verisions/types" of prequals/approvals.
Having ethical and trustworthy Realtors and mortgage brokers on your side is key. Hope this has helped!
Eric Axelson, Associate Broker
Kurfiss Sotheby's International Realty
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