Getting a mortgage…

If you’ve either bought a home before, or familiar with the mortgage process, your time may be better spent reading something else…

But if you are new to the process, put simply, a mortgage is a loan for the purpose of buying a specific piece of property. The lender retains an ownership interest and has the right, under certain circumstances, to sell the property if the person who applies for the loan fails to pay.  Since the lender has the right to foreclose on the loan, care should be taken to only borrow what you can pay not only now, but in the future.  Banks make money on your loan by charging interest.  They make more money on a larger loan.  It is in their best interest to lend you as much money as they think you can payback (regardless of that loan’s effect on your lifestyle).  My rule of thumb is whatever the bank says you can borrow is too much.  That is unless you can be absolutely sure that your earning power and take home pay will increase faster than the rate of your living expenses and taxes.  If at all possible, avoid maxing to the bank’s offer.  Leave that money available for education and experiences.  Life isn’t about what you live in… it’s about what you do with it…

For financially responsible people (those with a good credit score), taking out a mortgage loan isn’t really that complicated, but the path from pre-approval to a loan commitment letter is long.  The underwriters (the people at the bank who actually approve the loan) will require a substantial amount of evidence supporting that you will be able to consistently fulfill, over the life of the loan, your financial obligation.  They will ask for proof of your employment and your assets.  They will ask for your tax returns to see so that they can review them for support of your employment and/or red flags such as large capital or casualty losses.  They may request written explanations of things that just don’t make sense to them.  And they may do this at the last hour.

But that’s ok.  The process starts with a pre-approval letter.  A pre-approval letter is not a guarantee of a loan.  It is a statement from a lender that based on a cursory review they believe that the person to whom it is issued can afford to pay a loan up to the amount stated on the letter.  And if your credit is good, and you have a prior relationship with the lending institution, it is very easy to get.  And before I start to take you on tours of homes, you need to get it.

If you have less than stellar credit, don’t lose hope.  There are lenders incredibly skilled at working with you to determine down to the penny, how changes in your existing credit card and loan balances will increase your credit score.  Additionally, while many underwriters stick to a cookie-cutter-one-size-fits-all approach, these other lenders consider extenuating circumstances, and will work outside the box to approve you for a loan (but not outside the law).  I know a few lenders who specialize in exactly this type of problem solving and I glad to make a recommendation.

Whether you have questions about the process, how to ensure that you are getting the best deal available to you, or need a list of vendors who specialize in getting loans to people with extenuating circumstances, I can help.  I can be reached either at 413-564-9468 or at ejeffreyklotz@gmail.com.