What you need to get approved for a home loan? Are you ready to buy a home? Are you
tired of living in an apartment? Ready to get your own place in your own land? Well,
real estate ownership is still the number one way to wealth. And so, let's
talk about how you can start getting your property so that you can grow your
wealth. Let's go.
I'm going to share with you the 5 things that you really need to show a lender so
that you can get accrued for your first home loan. I'm going to tell you what the
best type of loan is for your situation. And I'm going to share with you some
real-world experiences from my time as a mortgage processor, as a mortgage
underwriter and then as a vice-president in mortgage banking. Some secret insider
tips that no one knows. So, let's talk getting approved for a home loan. So, we
are talking about getting approved for a home loan. We're going to just talk about
how to buy a primary residence and how to get approved for a primary residence
home loan. So, when you apply for a mortgage home loan for you to live in,
that is considered a primary residence. If you were purchasing a home and you
did not plan on living there, you were just going to visit there every now and
then, that would be considered a second home. Or if you were making it just for
an investment, that would be considered an investment loan. And so with each
different type of loan depending on your occupancy whether you're going to live in
the property or whether you're not going to live in the property, that is a risk
factor. So, one of the lowest risk is if you are going to live in the property. So,
that is like the easiest type of mortgage loan to get approved for is a
loan for a property that you're going to live in. And when I say easier, meaning,
most banks do them, okay? You're going to be able to find lots of banks and lenders
that land on primary residences. You're going to find that they will lend you very
high LTVs or loan to values where they would give you in most cases most of the
money to buy the home. And they're going to have really low interest rates,
3%, 4%. In many cases, you don't have to spend a lot on the interest rate. And
again, this a home for you so it's considered lower risk because they feel
like if you're going to live in the property then you are more likely to pay.
Okay? So, just giving you the basics of how mortgage lending works and what lenders
are looking for and depending on whether or not you're going to live in the
property that affects your loan application process and what you will
need. So, for the purpose of this conversation, we're just going to talk
about getting a proof home loan for property that you're going to
live in. So, before you actually go and find the home of your dreams, in most
cases, you are going to do what's called a pre-application. You're going to do a
pre-approval process with a lender, okay? So, before you ever go find your dream
house and you go out with a realtor, they're going to ask you to get
pre-qualified with a mortgage company. And they're going to give you what's called
a pre-qualification letter or a pre-approval letter. Now, I'm not going to
get into too many different details about that because there is a difference
between a pre-qualification and a pre-approval. But for the sake of this
conversation, we're going to just go with the full pre-approval where they look at
your income, they look at your pay stubs. They kind of just make sure that you
really truly can't buy a house. And so, there's 3 different types of loans
that you're going to be primarily going for. There are government loans which is
probably what most people, most for first-time homebuyers get. Their FHA
loans which stands for the Federal Housing Authority. And they have very
high loan to values where it's usually almost 97%. So, you as
the borrower only have to bring 3.5% to the table. And in
many cases, they have down payment assistance programs. So again, this is not
for everyone. Everyone's not going to qualify for a downpayment assistance
programs. But there's a ton of them out there where you don't have to put any
money down. They will lend you almost all of the money that's required for you to
buy the home. You just have to come up with a few hundred dollars for maybe the
appraisal and the insurance and things like that. So, when we're talking about...
That's one type of loan. Those are FHA loans and that's pretty much most people
in the world most borrowers can get an FHA loan. If you were a veteran, for
example, there's veterans associations loans --VA loans. And then there's called
USDA loans which are for like rural areas. Those are your three primary types
of government loans that are available at most lenders, okay? Now again, you don't
go to the government and apply for these loans. You go directly to your lender and
they will get you these government back loans. Again, most people will do FHA
loans and so those are some of the ones that we'll talk about a little bit later
that are the easiest to get qualify for. Now, there's also conventional
loans. Conventional loans are through back to by Fannie Mae and Freddie Mac.
You may have heard of them. But again, you go.. You don't go to Fannie Mae and knock
on their door and apply for a loan. You go to your lender and they have those
loans available for you. And then they are backed by Fannie Mae and Freddie Mac.
And they follow their guidelines. So, just kind of giving you the overview. And then
we have regular loans that the bank has themselves. Their private loans. Many
cases they may be called non-QM, non qualified mortgage or even subprime is
coming back now. And there's a lot more loans available for the subprime market
if you have bad credit or if you're not able to prove your employment or maybe
if you're self-employed and you didn't file all of your income on your tax
returns. Things like that. They have loans that are called ALT A which is
alternative to the a paper which is alternative to conventional. And they
also have higher interest rates though. So, it's a little bit more risky but
usually these are for people that cannot prove all of their income or their
assets and things like that. So, those are the 3 primary categories of loans.
Again, government loans, conventional loans and then subprime / alt a loans.
Those are the main types of loans that there are available for you guys just to
give you a quick overview. So, let's talk about what lenders are looking for. So, in
any case, whether you are getting any 3 of those categories of loans, in
any case, the lender is looking to see if you are able to repay that loan, okay? And
every single lender all the mortgage processes you know different companies,
they pretty much have the same process, okay? You apply for the loan, you submit
some documentation. There's what's called a loan processor. She will order some
things or he will order some things, some documents and verify a couple of items
for you. Then there's an underwriter that's the person that approves or
denies the loans and reviews all of that documentation and makes a final decision.
And then once they finally approve the loan after reviewing all of the
documents that you've sent and the appraisal and things like that, then the
loan moves to the closing department, okay? But let's talk about the meat of
that. The meat of that is the processing of the
loan. This is where most people say, "Well what do you need?" And for the most part,
it's documentation. It's going to be things like your bank statements. The last 3
months is going to be your pay stubs showing if you have pay stubs. Showing
what you've earned, is going to be your w-2s from the previous 2 years or your
tax returns. Showing the income that you have reported to the IRS. Those are the
things that lenders are looking for because what lenders are trying to do is
establish the level of risk that you as a borrower presents. And so, they're
looking to see if you have the ability to pay them. And again, I won't go this
long thing. I actually used to be a mortgage underwriter many, many moons ago.
I'll share with you really quickly, I actually was a mortgage processor as
well. And I still have my mortgage loan officer license
among of some other credentials that I have. So, I've worked in the mortgage
industry for over 18 years. I still have many friends that work in the business
and I'm connected to a very large group. And essentially I actually even own a
portion of a mortgage company. So, I'm telling you this full transparency. I
know a lot about mortgages and how to get approved for them. And I'm going to tell
you though they're looking to see if you can repay the loan. And so, they have
what's called the five C's of lending where they're looking at your credit and
they're looking at the collateral. That's what the appraisal is going to do.
They're going to evaluate the praise the property through an appraisal to see how
much the property is worth. There's going to be inspections that are done on the
property to make sure that the property is in good working condition. But they're
really looking at you. When we are talking about getting a loan for
yourself or a primary residence, most of what they are looking at has to do with
you as a borrower. Are you able to repay that loan? And how they determine that
and answer that question is "How have you paid your bills in the past?" That's your
credit and then what is your ability? What is your capacity to pay? Do you have
a stable job? Do you have stable employment? Is your
income enough to cover the mortgage in the expenses that comes with owning a
property? That's what the mortgage underwriter is looking for. So, when
you're talking about what's needed is the
documentation related to that. And they will give you what's called a condition
sheet that lists out all of the documents that you will send to that. So
really quickly, the conditions. This is one of the five C's of lending. So, the
five C stands for credit, collateral, capacity, conditions and capital. So, the
capital is your down payment. The conditions, those are what we're talking
about. Those are the conditions of the loan. You know, what's your letters of
explanation. What has happened in your situation before. They're going to ask you
for conditions. They're going to ask you for documents. They're going to ask you to
provide documentation to support that you can repay the loan. That is really
the crux of what you need and what you'll provide. But other things that you
provide for the loan process, the lender will either order or your processor will
order and things like that. Your loan officer may order some of those things.
But the conditions, that's going to be what's your responsibility. If they ask
you a question like, "Hey, why do you have these inquiries on your credit report?"
Meaning, "Why did these people look at your credit?" You're going to have to write a
letter and explain. "Oh! Well, I was shopping for a car." Or "I was
checking that out." Or "I moved around." They may ask you about different places that
you've lived. There's different things that the underwriter is going to ask you
for. These are called the conditions. And you are going to be responsible to
providing what they need. Nothing more, nothing less.
Don't start giving them extra stuff things that you may think may help. No, no,
no. Just follow the condition sheet. Talk with your loan officer if you have any
questions but do not just start submitting documents to the lender. You
can easily get denied by accident. So, I am having an awesome 3-day training
event called grow your wealth. And I invite you at this time to go to
growyourwealthevent.com and check it out and
start getting tickets for the event. I would love to meet you guys in person. I
have all of this content right here for free. But I would love to meet you guys
and teach you 3 full days of training with a full workbook. It's so
small class where there's enough time to answer questions where we can eat lunch
together. And I can really teach you in 3 days the entire business so that
when you leave this training, you can leave with a plan of action for your
real estate investment. So, if you are serious about investing in real estate
and you really want to learn from someone that has real experience and real
education and is doing this and is willing to share all of this with you
and show you my properties, then this event is for you. Again, it's 3 full
days of training. Please check out the link below and get your tickets. I would
love to see you guys in person.
This is Noelle. To your success.