April On Center

So, I realize that talking to a complete stranger about your money is about as fun as going to the dentist or paying taxes. I get it.

I also understand that having a new home consultant look at you and say, “Have you spoken to a lender yet?” sounds a whole heck of a lot like, “Let me size you up so I can decided if you are worth my time.”

I can assure you most mortgage lenders I know appreciate your frankness and want nothing more than for you to be comfortable. If they are not treating you that way, go find another lender. Buying a home will be one of the biggest decisions you make. You should be working with people who work hard to produce a fantastic experience.

And most real estate professionals understand that buying a home will not happen overnight. I have already signed up for the time committment. You, regardless of the time expended, are top priority. You are why I have a job. You are worth my time.

Let me explain a little further.

Before I can do anything on my end, I need to have a mortgage lender tell me you can qualify for a mortgage in the amount of the home. Banking institutions will typically not lend money to a builder to build a home unless they are fairly comfortable that the home will be bought by a homeowner and satisfy the construction loan.  So step one is actually the mortgage.

The mortgage broker is looking for four major things.

1. Collateral – in terms of a mortgage, this relates to the appraisal of the home. The mortgage lender will not lend more than the house appraises for. In new construction, this has to be considered when assessing upgrades mostly. As your new home consultant, I will advise you when we are reaching that margin – but the mortgage lender will be the person advising me on what those numbers are after speaking with you.
2. Capital- this refers to your down payment. The amount of down payment required will be determined by you and your mortgage counselor depending on the different mortgage programs you qualify for. Some programs qualify for 100% financing while others can require as much as 20%.In today’s mortgage environment, this can also refer to cash reserves (i.e. savings). Mortgage brokers will often want to verify these funds. Sometimes they will require proof of saving totaling 1 – 3 months of mortgage payment. It is a good idea to provide this information to your lender to bolster the mortgage package.
3. Credit – this is almost completely score driven. Almost all lenders can do something with a 640 and above. Some will offer options between 620-640. 600-620 is a process. Under 600 you will find some lenders who say they can do something. They rarely are able to come through due to the almost impossible criteria. However, the mortgage lender is your best asset in understanding both your score, what it means and steps to take to get it to where it needs to be if necessary.
4. Capacity – this refers your ability to repay the loan. This typically comes in the form of length of employment, time in particular field, and income and taxes verification. You will typically have to produce W-2′s, 1099′s or whatever form of income reporting you utilize. Tax returns are helpful and will be pulled for verification. Employment status is an important thing to verify. Under some situations different income can be categorized different ways. Your mortgage lender will ask you to disclose all sources of income and determine how to best proceed

Lamar Smith Signature Homes currently offers incentives to work with specific lenders. This relationship helps to ensure a timely close and is thus beneficial to all parties involved. However, you are never required to use any particular lender.

You can find our current list of lenders here.

The most important idea is to know that it is my job to find you the house that best supports you and yours. It is the lenders job to do secure the financing for that home. We appreciate you and your trust. We will work hard to deserve and retain it.

**Photo Credit to LuMaxArt