| A loan approval for a well qualified home buyer used | | | | applied for. |
| to be almost like a formality but not anymore, due to | | | | 5. Buyers Tax Transcripts - Since nobody trusts |
| the mortgage meltdown of the last few years, we | | | | anybody anymore, the lender will ask the IRS for a |
| have seen a dramatic change in the way home loans | | | | copy of your last 2+ years tax returns. The lender |
| are underwritten. | | | | wants to see if you have had reimbursed Business |
| Going from the infamous liars loans, I mean "Stated | | | | Expenses and/or Business Losses for example. The |
| Income" to now "Full Documentation" for every single | | | | number of the form to remember here is: 4506T |
| loan has had a tremendous impact on the real estate | | | | 6. Lower Debt to Income Ratios - Most loans are now |
| industry because it reduces the already small pool of | | | | analyzed via a Desktop Underwriter, a maximum |
| potential home buyers. But, is there anything that the | | | | approval ratio of 45% of income is the rule. The |
| applicant for a home loan can do to smooth the | | | | borrower however has to have extremely great |
| process and to stand a fair chance of getting a loan | | | | compensating factors to even try for a higher |
| approval? | | | | approval ratio but it will never go above 50% anymore. |
| Loan officers are playing detective now, and their job | | | | 7. The Appraisal... or Appraisals - On May of 2009 the |
| includes fraud prevention. They have been extensively | | | | appraisers come under a new government rule called |
| trained to read and analyze tax returns, bank | | | | HVCC. These rules have created more havoc for |
| statements, application forms, job evaluations and | | | | Realtors than any other factor. Low appraisals are |
| written explanations. If you are ready to open your | | | | now the norm and buyers sometimes have to pay for |
| soul, here are 7 steps to get you prepared for such an | | | | more than one appraisal if the first one come in low |
| ordeal. | | | | and the seller could or would not negotiate, moving |
| 1. Declining Income - As companies, downsize and | | | | onto another property means another appraisal |
| reduce their number of employees, and sometimes | | | | without guarantees. |
| reduce the number of hours worked for those who | | | | Even if you are not thinking about buying a house right |
| stay, only the current lower income will be considered. | | | | now, start saving all your papers, clean your credit, and |
| This situation actually creates a Red Flag for the | | | | be careful who you co-sign with. Do not ask for a |
| underwriter who would now question weather the | | | | credit report too many times, if there are issues on the |
| company the applicant works for is going out of | | | | report, make sure you document your dispute and |
| business, this investigation can delay the entire process. | | | | keep a neat and clean file for future reference. |
| 2. Credit report - Well before home buyers apply for a | | | | If you are trying to get money for a down payment |
| loan they should be very careful as to how many | | | | from friends or relatives, start early enough so as to |
| inquires are made and for what reason, they should | | | | show that those funds have been in your account for |
| keep documentation to show the reason for the inquiry | | | | a while. Unfortunately, you must go through this |
| or if they had any dispute for items showing in their | | | | process before you can enjoy the fun of looking for |
| report. Minimum FICO scores are about 620. | | | | homes to buy. |
| 3. Continuous Job History - Buyers have to be ready | | | | If during your first loan application meeting the loan |
| to explain in writing every single gap in their | | | | officer begins with the following sentence: "You have |
| employment in the last 2 years that is longer than 2 | | | | the right to remain renting, anything that you say or |
| months, more than 2 months out of work and the loan | | | | give to us could be used against your dream of |
| is denied. | | | | owning a house, if you cannot afford this loan, nobody |
| 4. Bank Statements and Deposits - Any large deposit | | | | will ever loan you anything..." do not run! It is simply the |
| into the buyers account within the last few months will | | | | new way of getting a home loan. |
| raise a red flag for the lenders, they will ask to see | | | | You are considered guilty of not having enough money |
| where it come from and why, they call this a "paper | | | | or income or credit until proven house-worthy. Once |
| trail" so make sure you can explain it and prove it. Any | | | | you pass this test, you can call me so I can put you in |
| notice of "insufficient funds" on a borrowers bank | | | | contact with a Professional Realtor in your area that |
| statements is bad, almost lethal to the loan being | | | | will help you... get home! |