Credit Qualifying, and Completing Loan Application
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Credit Qualifying, and Completing Loan Application

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A copy of the presentation, updated and uploaded March 26,2009

A copy of the presentation, updated and uploaded March 26,2009

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Credit Qualifying, and Completing Loan Application Credit Qualifying, and Completing Loan Application Presentation Transcript

  • First Time Home Buyer’s Complete Guide to Credit, Qualifying and Completing the Loan Application
    • Thank you for attending
    • We will begin in a moment
    • Class Scheduled to begin at 6:00pm
    • Presented by
    • Scott Schang
    • Sponsored by
    • Broadview Mortgage Corporation
    • 1-866-667-6724
  • Credit, Qualifying and Application
    • The Purpose and Goals of this Class
    • To Create and Empower Home Owners
    • Educate you about your credit, the loan application and qualification process
    • Empower you with the ability to make educated decisions in the home buying process
    • Enable you to make sound financial decisions based on information, education and experience
  • Credit, Qualifying and Application
    • Topics We Will Cover In This Class
    • An Introduction to Your Credit Report
    • The Loan Application Process
    • The Loan Qualification Process
    • Wrap Up and Take Aways
  • Credit, Qualifying and Application
    • Ask Questions throughout presentation
      • You may type questions in at any time during the presentation – Questions box on your screen
      • Home buying specialists are standing by to answer your questions during the presentation
      • This is an interactive learning environment – you will get the most value by having your specific questions answered
      • The only dumb question is the one you don’t ask
    • Write number down now in case you get disconnected
      • 1-866-667-6724
  • Credit, Qualifying and Application
    • An Introduction to your Credit Report
    • What you need to know about your Credit
    • Installment Loans and Revolving Credit
    • 3 Steps to Improving your credit scores
    • Wrap up and Take Aways
  • Credit, Qualifying and Application
    • What you need to know about your Credit
    • Your Credit is a Current Snap Shot
      • Creditors report on different cycles
    • Not knowing how to build good credit can result in bad credit
    • How to get your truly FREE Credit Report
      • FTC Credit Report Site www.ftc.gov/bcp/conline/edcams/freereports/index.html
      • www.AnnualCreditReport.com
    • Free credit reports from TV are not FREE
    • Consumer credit reports do not report the same as mortgage inquiries
  • Credit, Qualifying and Application
    • What you need to know about your Credit
    • Credit reports are not always right
      • Creditors are much quicker to report negative items than they are to remove them
    • How credit can affect your loan approval
      • Can trigger “risk based pricing” – increase cost
      • FHA does not penalize for credit scores
    • 12 Month payment history
      • Most lenders are looking at past 12 months
    • Credit Reports show past employers, past addresses, AKAs, social security number and birth date deviations
  • Credit, Qualifying and Application
    • Installment Loans and Revolving Credit
    • What is an Installment Loan
      • Fixed term
      • Fixed Payments
      • Auto, Education, Furniture, Cash Call
    • What is a Revolving Credit Line
      • Credit Cards
      • High credit limit / Balance
    • How they differ / How they are the same
      • On time payments the same
      • How Balances are treated are different
      • Number of months remaining
  • Credit, Qualifying and Application
    • 3 Steps to Improving your credit scores
    • Step 1 – Know your Do’s
      • Do Order your free annual credit report
        • Or have a lender run your credit
      • Do Educate yourself about your credit
      • Do maintain at least 3 revolving accounts
      • Do keep balances on revolving credit lines under 50%
      • Do Treat your revolving credit cards like an AMEX
      • Do pay your “Reported” debts on-time
      • Do ONLY use “referred” credit repair services
  • Credit, Qualifying and Application
    • 3 Steps to Improving your credit scores
    • Step 2 – Know your Don’ts
      • Don’t be afraid to speak to your creditors
      • Don’t take out “quick fix” loans with extremely high interest rates
      • Don’t max out your credit cards
      • Don’t apply for every credit card application you receive
      • Don’t transfer credit card balances to one card
      • Don’t Make payments more than 30 days late
      • Don’t use credit repair services without a personal referral from someone
  • Credit, Qualifying and Application
    • 3 Steps to Improving your credit scores
    • Step 3 – Take Action Now
      • Manage your existing credit lines
        • Pay down balances on revolving lines
        • Increase high credit limits on revolving lines
        • Reduce installment to 10 months remaining
      • Dispute derogatory items on Credit Report
        • Order free credit report to identify derogatory reporting
        • Order online report for bureaus that are showing derogatory accounts
        • Dispute all incorrect or inaccurate information
  • Credit, Qualifying and Application
    • Wrap up and Take Aways
    • There is no Mystery or Magic to credit reporting
    • It’s never too late to get on the right track and improve your credit rating
    • Knowledge is Empowerment – Educate yourself about good credit practices
    • 6 Month Plan – Starting from Scratch
    • Need it Now – Credit Repair Services
      • Costs range from Hundreds to Thousands
    • Perfect credit not required for FHA loans
  • Credit, Qualifying and Application
    • The Loan Application Process
    • 2 years Housing History
    • 2 years Employment History
    • Assets and Liabilities – Credit History
    • Legal Declarations and HMDA Reporting
  • Credit, Qualifying and Application
    • The Loan Application Process
    • 2 years Housing History- Pg 1
      • Rental history from Apartment / Mgmt Company
        • Verification of rents – verify timely payments
      • Rental history from Private Party landlord
        • 12 months cancelled checks showing monthly payments
      • Living with Parents / Family
        • No documentation required – must be truthful
        • Cannot not have residence history on credit
  • Credit, Qualifying and Application
    • The Loan Application Process
    • 2 years Employment History- Pg 1
      • If less than 2 years employment, may ask for schooling in similar subjects as line of work
      • Ok to change jobs if line of work is similar
      • Ok to change line of work if history is at least 2 years
      • Ok to go from Self Employed to employed (W2) with less than 2 years “employed” if in same line of work
      • Self employed must show minimum of 2 years
        • Tax returns, business license
      • Income documentation is 2 years of tax returns or W2’s and most current 30 days pay stubs
  • Credit, Qualifying and Application
    • The Loan Application Process
    • Assets and Liabilities / Credit History- Pg 2
      • Sourced and seasoned assets
        • Must show in account for 60 days
      • Assets must cover closing costs and reserves
        • Reserves not required for FHA
        • Reserves = compensating factor for approval
        • Must be able to use funds to be reserves
      • Gift funds can be used when allowed
        • Must provide paper trail if deposited
        • Best to always wire directly into escrow
      • Liabilities imported from Credit Report
      • Present and Proposed housing expenses
  • Credit, Qualifying and Application
    • The Loan Application Process
    • Legal Declarations / HMDA Reporting- Pg 3
    • Declarations
      • Discloses law suits
      • Bankruptcy history
      • Co-ownership / Co-maker on note
      • Intentions of occupancy
      • Past occupancy
    • HMDA Reporting – Monitors discrimination
      • Ethnicity & Race
      • Sex
      • Acknowledgment and Authorization
      • Let’s complete an application
  • Credit, Qualifying and Application
    • The Loan Qualifying Process
    • Automated Underwriting Engines
      • Fannie Mae is standard
      • FHA DU
    • Risk Assessment Underwriting Model
      • Income of household
      • Assets (reserves)
      • Credit profile
      • Equity (loan to value)
      • Loan to Value
  • Credit, Qualifying and Application
    • The Loan Qualifying Process
    • Compensating Factors
      • Debt to income
      • Months of reserves
      • Credit Scores
      • Loan to Value
    • Manual Underwriting – FHA Only
      • Actual FHA approved underwriter reviews all documents – much more restrictive
    • Debt to Income Ratios are most restrictive
      • Maximum purchase price will be determined by maximum payment / DTI
  • Credit, Qualifying and Application
    • Wrap up and Take Aways
    • Getting approved for loan is the first step
    • You cannot get approved without completing the loan application and getting an underwriting approval
    • Begin gathering your documents and putting together all information for loan approval
    • If credit challenges prevent approval now, at least you know and you can work on it
  • Credit, Qualifying and Application
    • Wrap up and Take Aways
      • We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, USDA, FHA, VA and down payment assistance programs
      • We can refer you a qualified Real Estate Agent that shares our knowledge and values
      • We are more than happy to be your “second opinion” if you are already working with someone
      • We are committed to educating and empowering homeowners - Join us for future classes
  • Credit, Qualifying and Application
    • Wrap up and Take Aways
    • You will receive a “Thank you” email with links to the information we’ve talked about here today
      • Copy of power point presentation
      • Secure on-line loan application
      • Links to tools and resources we talk about in all of our classes
      • Dream Home Finder request
      • A schedule of all upcoming classes
    • Update on Tax Credit
      • $10,000 tax credit for CA / $8,000 Fed
  • Credit, Qualifying and Application
    • Upcoming Home Buyer Classes
    • Five 100% Financing Loans You Should Know About
    • A Complete Guide to Buying Foreclosures and Short Sales
    • A Complete Guide to Closing Costs and the Good Faith Estimate
    • A Complete Guide to the CalPERS Home Loan Program – No down option
    • A First Time Home Buyer’s Complete Guide to Hiring a Real Estate Agent and Finding the Best Deals
    • A Complete Guide to FHA Purchase Loan Options
    • Check back often for upcoming classes
  • Thank You for Attending If you enjoyed this class – Tell a friend 
    • Your input is Valuable
    • Please complete 2 question survey when you log off
    • For more information
    • 1-866-667-6724
    • Presented by
    • Scott Schang
    • Sponsored by
    • Broadview Mortgage Corporation