Qualifying for a Loan

Qualifying for a Loan

When qualifying a buyer, a lender will take a look at credit, income, liabilities, and assets. It’s important to sit down with a loan originator to take a look at these items together and find out what you qualify for. Here are the following documents needed to start the pre-approval process:

– 2012 and 2013 Signed Federal Tax Returns

– 2011, 2012, and 2013 W2s and 1099s

– Last 30 days of paystubs

– Last bank statement

– Copy of Driver’s License

What lenders look for with these documents:

  1. Credit: Most lenders will require a minimum credit score of 640 with little to no derogatory trades like late payments, collections, judgments, bankruptcies or foreclosures listed on the credit report. If you have any of these derogatory trades, you can probably still qualify for a loan. Please reach out to us so we can take a look and see if there’s anything we can work with you on to get you in the right spot.
  2. Income and Liabilities: Lenders must make sure you’re able to pay back the mortgage and can usually only go up to a certain debt to income ratio. The lender will add up all your current monthly liabilities reported on your credit (credit cards, car loans, mortgages, student loans, etc.) plus the new monthly payment you will take on with the new mortgage and divide this total number by your monthly income. Recent guidelines have limited this debt to income ratio to 43%. But there are exceptions if you have a large amount of money saved up.
  3. Assets – lenders will also make sure you have enough assets to cover the down payment and closing costs. Refrain from depositing a bunch of money into an account or transferring money between accounts. This is because every lender must have you write a letter of explnation and source all deposits that are 25% of your monthly income or more. This rule is to abide by the Patriot Act to make sure you are not a terrorist or laundering money for terrorism.

Please let me know if you have any questions, comments, or referrals.

Your Lender for Life,


Debt-to-Income Ratios Can Derail Your Home Purchase

Great blog for first time homebuyers to better understand DTI qualifications.

Find Your Balance

162720557 You’ve got your down payment. Your credit score is fantastic. You’ve even figured out your monthly budget for housing expenses.

So now you’re ready to charge ahead into the home buying process, right? Maybe not. If you’ve overlooked your debt-to-income ratios, you might not be as mortgage-ready as you thought.

What are they?
As the name suggests, debt-to-income ratios (DTIs), are ways of measuring a person’s monthly debt payments as they relate to incoming cash.

There are two main types of debt-to-income ratios used by mortgage lenders. These are known as the front-end ratio and the back-end ratio. The front-end ratio measures monthly payments for only housing-related expenses, like mortgage principal, interest, taxes, mortgage insurance, homeowner’s insurance and HOA fees (if applicable).

The back-end ratio encompasses all debts that are currently or will be paid on a monthly basis, like the housing-related expenses, home equity loans, credit card minimums, student…

View original post 267 more words

Are You Ready to Buy a Home?

With house values increasing and historically low rates, some renters are still wondering why they should own their own home. Here are some reasons you should consider buying a home:

Holding house1. You no longer have to answer to a landlord, worrying about whether you’re going to get back your full deposit or not and if things are going to get repaired and taken care of.

2. With each payment you’re making towards your mortgage, you’re investing in your home by increasing the equity. You could see this money down the road when you decide to sell your house or do cash out refinance. When you’re renting, you’re paying for someone else’s mortgage and investment.

3. You can change the look and layout of the house to fit your style. You can paint, remodel and change the house without worrying about asking for permission from the landlord.

4. Depending on your situation and what you qualify for, you could be saving money on a mortgage payment vs. a rent payment. Trulia just released that in 2013, buying a home in Denver was 45% cheaper than renting (http://trends.truliablog.com/vis/rentvsbuy-summer-2013/)

5. Low interest rates and affordable homes will not last forever. Although buying a home makes more sense financially now, that gap will start closing as rates and home values continue to increase.

6. Guidelines and regulations to buy a home have gotten stricter within the past few years and will only continue to make it harder to buy a home. Buy a home now while you can before income guidelines become stricter and make it impossible for you.

7. Tax Benefits – You’re able to write off a lot of expenses and costs of owning a home. I recommend consulting your accountant for specifics, but there’s many tax benefits of owning a home.

8. One thing to keep in mind is the upkeep of a house once you own it. There isn’t a landlord to call and take care of repairs and damages. You’re on the hook if anything happens to the property, so saving money is even more important than before.


Don’t hesitate to let me know if you have any comments, questions or referrals.

Your Lender for Life,