Here Is How To Easily Get Pre-Approved For A No Down Or Almost No Down Home Loan

  When you pick up that phone or click the mouse to   talk  to the realtor about the house you just found, the one you really like, the first thing they will ask is are you pre qualified or are you pre-approved?

And hopefully the answer is yes

Pre Approval VS Pre Qualification

  Real estate experts tell first-time home buyers all the time that it's critical to apply for a loan before shopping for a home, and it's true; this is an essential first step. But do you know that it's far better to be pre-approved for a loan than to be pre-qualified?

  There are more advantages to gaining pre-approval before hand than you would initially presume. When the lender hands a borrower a pre-approval letter, it means the borrower can:

Look at Homes You Know are Within Your Means…...Saving Time

  If your real estate agent is sending you automatic e-mail listings of available homes, you can ask him/her to change the parameters to match exactly the selection of homes that you are qualified to buy.

  If you're not receiving e-mails from your agent, ask him/her to send them to you. Most MLS systems allow an agent to send clients much of the same data that agents receive.

  This way, you'll save time by checking out homes you can actually afford to buy instead of falling in love with pie in the sky.

 Spend More Of Your Time and Energy Looking at the Right Homes

  By decreasing the inventory of homes to those that fit your parameters, you can allot more time to thinking about all the little nuances each home has to offer. Lots of home buyers never move past the price point when sorting out their preferences, but now you can devote your energies to looking at the little things that matter to you most such as whether your SUV will pass through the overhead space in the garage or smash into the micro beam.

Gain Confidence & Avoid Disillusionment

  Now when you find that perfect home, nobody can take it away from you by telling you that you do not qualify to buy it. You can minimize anxiety and remove last-minute loan surprises that could disqualify you.

  You'll sleep better at night knowing that the home you selected is yours. Moreover, you can tell your relatives and friends that the home you made an offer is definitely going to close and you will not "lose face" with anybody.

Increase Bargaining Power, Negotiating Power And Your Chances Of Getting Your Offer Accepted

  Sellers will be more likely to immediately accept your offer, even if that offer is for less than list price, because you are giving the seller peace of mind that her home is sold. He/She can take his/her home off the market and place it into pending status with confidence.

Enjoy A Faster, Less Stressful Closing Period

  Because there is no window period while your loan application is processed, the lender can speed up the entire processing procedure. Appraisals can be ordered immediately. It's possible to shorten a 30-day closing to two or three weeks, which comes in handy if a seller, needs to quickly move and can't decide which offer to accept. Yours will move to the front if you can accomplish the seller's need to quickly close.

  Because mortgage approval is generally the longest contingency to satisfy in a purchase contract, it is to your advantage to obtain a pre approval letter as soon as you're ready to begin your search. Lenders will render a decision based on your complete loan application, employment verification and data from all three credit reports.

Here Is What You Really Need To Know About Getting Pre-Qualified

Credit

  Credit is the most important thing to a lender because it’s the best way a lender can determine how risky you are as a borrower, however what’s known as compensating factors can offset some past bumps in the road. Ill explain later but for know, a lender looks at how you manage your payment obligations and overall credit worthiness.

 Your credit is scored by a 3 digit number, kind of like in school

A would be 720+

B would be 680+

C would be 600+

D- is less than 580

  If your scores are a little low keep in mind that you can work to improve your scores and you can still qualify for a FHA loan even with lower scores.

Income

  Second in importance, a mortgage actually is not a loan on your house but it is a loan on your income, and a lender wants to be sure you can repay. So stuff like time on the job is very important.

  Being at one job for a period of two or more years is the minimum requirement however if you have had more than a few jobs in the last two years but in the same line of work that’s OK, hopefully no gaps in employment for more than a few months

Debt

  Debt goes hand in hand with income so here is were the rubber meets the road. How much debt you have can affect how big your new house will be (how much house you can afford). So here is a good example of how this works

Your income is                                 $5500 per month

Your debt payments are                   $1800 per month

Your current rent is                          $1500 per month

Total                                               $3300 per month

$3300 of $5500 = 60% of your income is debt, that’s to high and too much debt

Here is a better example

Your income is                                $5500 per month

Your Debt pmnts are                       $800 per month

Your rent is                                     $1500 per month

Total                                               $2300.00 per month

2300 of 5500 = 41% of your income is debt this number is better.

Assets

  This should be self explanatory. The lender needs to see that you have the money for the down (if required) and closing costs if you agree to pay those per your contract.

  One thing to keep in mind is you have to season the money in your account for at least 60 days, sometimes less depending on the loan program. The bank does not want you to borrow the money unless they know what the payments are and can count those against your total payments.

Down Payments ..No Down and Almost No Down

  So the next logical question is how can a potential first time home buyer get approved for a No Down Loan or almost no down loan?

 There are several ways to get financing that do not require huge sums of money.

  3.5% down is the most common and is a FHA loan. There also several ways to still get

True 100% financing depending on were you are purchasing. In Ca for example you can still get Cal HFA, USDA (not steak) Access for FHA and CRA .

How much is 3.5% and what about closing costs?

 Not to get to much off topic here but quickly 3.5% of 300k is about 10,500 and closing is about 2 to 2.5% of the purchase price, so about 6000 + 3000 for reoccurring cost such as pre paid interest taxes insurance mortgage ins and impounds (taxes and insurance a part of your payment)

Gifts

  You can also get the down payment gifted by a relative or someone you have a close relationship with.

  There are a few ways to get around the closing costs. First of all it’s a buyers market right now and you can get some or all of the closing costs paid by the seller.

More on Down Payments

  There are down payment assistance programs and silent 2nds that can cover the down payment. You will want to check with your Local County or city to see what they have got.

More on Compensating factors

  If your re concerned about getting approved because you have a low score or not enough income, time on the job to much debt, an area of weakness can be compensated by an area of strength.

  For example if you have some issues with your credit but you have been on your job a long time and have a good income that can offset low credit scores.

How The Approval Process Works

Now that we have all the nuts, bolts and moving parts, we put all that information on what’s known as a loan application and pull a credit report.

Next we get a pay stub, w2 for the last two years and your asset statements to validate what’s on the loan application. Plug all that into the automated underwriting and find out if your are approved

Eventually an underwriters human eyes will look at the file further along in the process and if there is a special circumstance (job gaps, credit issues, so on and so forth) that would be handled on a case by case basis but every file has a issue so do not let something you think could be an issue stop you from at least finding out what you will qualify for.

Here is How To Take the Next Step

A consultation with a mortgage consultant for at least 30 to 45 minutes will help you get clear on were you stand.  A consultant will ask Important questions. The more questions a the better served you will be.                                          

                                                                   Bill Larson

                                                                     Windsor Capital Mortgage Corporation

                                                                                           CMPS

                                                                             Consultation and Planning

                                                                                      925-216-9735