Kris Krohn here with Limitless Wealth TV and today we're talking about the
pre-approval process. This is going to be the shortest most compact course you've
ever had on how to know whether you want to get pre-approved, use someone else's
credit so you can make that deal happen.
Alright, man, you want to get out there and it's time for you to crush it in
real estate and pre-approval is one of the first things that you go to do so
that you can know what you're equipped with. You might be in a position right
now to buy real estate based on your credit situation or you might not. Either
way, as a bonus, I'm going to show you how you can get real estate no matter what.
But first let's talk about that pre-approval, let's talk about how you
make that happen. Really, it comes down to the fact that we have all these banks
and all of these banks are basically saying "What programs do we have for you?"
And all these programs are a little different, they're these lending programs and so
first of all, you do need to know that not every bank is created equal. When I
went and I was preparing to buy my first property, I was pushing the limit, I had
barely two years of work history, I had just gone from part-time pay up to
full-time pay and I walked into a bank that I had been banking with for years
and by the time days later has done what the pre-approval process, guess what they
did? They denied me. And I'm like, crap! In my mind I'm like, are all banks the same? I
went to another popular bank in the area, I went through that whole process and
you know what, I got denied again. I only had a couple of weeks left to finish my
loan before this house it is my first house this was going to create all this
wealth that it has for me in my life and as I didn't even know that at
the time I just knew that I needed to get this deal done and that's when I got
smart and instead of going to a bank, I went to a broker. Now in lending broker
is different, this is someone that works with many banks and I sat down with them
I said I got a couple weeks left, I'm trying to buy this house. I know I'm just
kind of trying to squeak through this bank turned me down, that bank turned me
down and this is what they said "Not all banks are created equal and there are
different programs for different people." Let's see your situation. Well, needless
to say, by the time I needed to close on the property, I got a loan. It was my
first loan. And it wasn't the bank that I banked at that made it happen.
It wasn't the other bank on the corner that I saw, it was dealing with a broker
so this is what you're looking for, you're looking for a loan officer
because a loan officer that has access to many banks is going to help you get
pre-approved when maybe the bank you're most familiar with is not capable of
giving you an approval. Now listen, you can't take it personal, banks are dealing
with millions of people and at the end
of the day, it's just ones and digits and they like
someone's and digits better than others. There are some things that'll work with
low credit ratings and other banks that won't. There are some banks where
they'll say well you make a lot of money but it's stated income and it's not
reported as a W2 so we don't like you and this other bank says we'll do stated
all day long so understand this first and foremost that people can get so
discouraged in the lending process and you got to toughen yourself up and get
some elephant skin on there and just not let that bother you so much, okay? And the
reason why is because there's all these banks and if you give up, you'll never
know what you were really capable of what you really could have done.
Here's what banks are going to look at: Number one, debt to income ratio. They're
going to look at what are your ongoing monthly obligations that you owe people
for like well you owe on this car rental and you owe on this and you all know on
that student debt and then they want to know how much leftover income do you
have after you pay your bills. Oh! That that will produce a debt to income ratio.
How much debt do you have versus how much you make. And that's something that
they're going to look at they're also going to look at what you have for a down payment
on a property. If it's a home for you, I love taking advantage of the 3% and 5%
down payment programs. You know on a $200,000 house 3% is 6 grand.
But investor lending, you got to put 20% down. 3% versus 20% right? So, 3% that's
awesome, that's smokin' on, I can take you know, if you buy a house with $40,000 of
equity and you put $6,000 down when that deal is done you're gonna walk away
feeling like a hero because you're going to make a pile of money. They're also going to
want to know is this for you to live in or is this an investment. Because those
are two very different banking systems. The lending rates and the things that
you get when you're buying a home for you is more lenient with generally lower
rates than buying an investment property. Because the bank will say what's higher
risk? Kris living in a house, or Chris putting someone else in the house. If
it's an investment properties, it's higher risk. Your interest rate may be
a full percentage higher, 1% higher, half a percent higher. All of those things are
what the bank is looking at including your hidden assets. 401k's, IRA's, any money that
you have in equity and other properties. Money that you have in savings and banks
going to want to know for you put a down payment, you're going to have a little
leftover in the bank and have three to six months worth of payments still.
Those are all the considerations that are happening in the bank sides. Now, before
you go find a loan officer, I want to share two very important things with you,
here's the first one.. You need to have your debt to income ratio which means
the money that is forcibly going out every month for obligations generally
can't be more than 50% of how much you make. If it is, you're probably
not going to get approved. The second thing is credit score. You got to have a
credit score generally 680 or 700 or 720, some banks will work with you at a 620
credit score but if you're in the 500's, then you need to use the alternative
bonus that I'm going to share with you a little later. So you got to do some
credit repair you got to get it your credit maintained and up a little bit.
And down payment, you got to have enough for the down payment whether it's 20%
or 3% as well as five three, four, five, six months worth of
payments in the bank. So let's say that mortgage they're going to be $800, the bank
might want to see that after your down payment you still have three, four, five,
six thousand dollars left over in the bank, they're like, woo, something happens
you lose your job, you got a couple months before you get your next job and
you can still make your payment and we as the bank we're not going down for it.
Okay? Now, if you're not in one so if you do
fall into that situation, the second piece of advice I have for you is, how do
you find a good loan officer? Okay, this is very important. Find a successful loan
officer. Successful means they do lots of volume with lots of banks. Okay? This is
really important, you can't go to the brother-in-law that's the loan officer
here. They can help you but if you want to be helped the most, you got to go to
the most successful loan officers out there that every month do sign on many
loans. You're looking for one that is at least doing at least five or eight loans
a month and that means that they have experience. If it's investment lending
that you need, not your primary residence, then you need a final loan officer that
specializes in in investment lending. So, how many deals are they closing a month
and number two, how many different banks do they work? Well, we really have just
one or two... Oh we've got 10 or 12! Okay, the one that has the most volume and has
the most banks is going to be able to open up the most doors for you. Now,
that's what you do to get pre-approved. Now where do you find loan officers?
That's easy. It's this really cool new technology called Google which is super
super cool. Just Google and start looking around and ask some people. Shoot,
post on Facebook. Anyone here know you know on your social media, anyone know a good
loan officer? And then you can call an interview. How many banks do you work
with? How many deals are you doing a month? They're going to feel that that's a
little bit invasive but it's all fair for you to understand that information
so you can pick the right person to work with.
So friends, that's how you get pre-approved on this. The last bonus
piece I want to give you is, what do you do if your credit is maxed out or if you
have bad credit? Listen, do not associate your self-worth or credit worthiness with
just your credit score alone. Exceptions happen, bankruptcies happen, divorce
happens, life happens, job loss happens, and sometimes people will allow one or
two those moments to define their creditworthiness for the rest of their
life. I tell you right now, I have good credit but I have good credit starting
from a place where I didn't have credit at all and I needed to build it andnd
there are times when my credit score dropped because I had a lot of real
estate and then I brought it back up and I'll tell you today, I'm using my
personal credit for maybe four or five properties and that's it, which means
that, how do I own all these other properties if I'm not using my credit?
Well friends, I'll tell you right now, it is my preference not to use my credit
when dealing in the game of real estate. I deal in partners, both for credit and
for money. Someone brings credit to the table, they get cut in on a on maybe 10%
15% of the deal. If someone comes to the table and they bring money, they usually
get cut on on 50% of the deal and that is the best news that I have for you is
if you're determined to do real estate, there's only two things that will stop
you. You don't got the credit, you don't got the money. If you got those two
things go out there and crush it and blow it up but if those are getting in
your way, I want you to click the link here come to my website and I want you
to investigate partner profits. I want you to investigate a program where I
show you how you can partner with anyone how to find the people with the money
how to find the people with the credit and now you become the matchmaker, the
deal maker and putting it all together. If you want to learn more about that,
check out the website because I'm going to tell you right now, never allow a lack of
credit or an overuse of credit to keep you from doing the deal that you're
supposed to be doing right now. If you're looking for a loan officer that can rock
it out for you, take care of you, that is doing lots of real estate and has been
doing lots of loans, and both the investment world that is uber qualified,
I want you to click the link. Get in touch with me and my team and we'll
share with you exactly how we can help you rock out your next real estate deal.