Loan Process
Find out how much you can borrow
The first step in obtaining a loan is to determine how much money you can borrow. In the case of buying a home, you should determine how much home you can afford even before you begin looking. By answering a few simple questions, we will calculate your buying power, based on standard lender guidelines.
Click here to Pre-Qualify.
You may also elect to get pre-approved for a loan, which requires verification of your income, credit, assets and liabilities. It is recommended that you get pre-approved before you start looking for your new house so that you:
- Look for properties within your range.
- Are in a better position when negotiating with the seller (i.e., the seller knows your loan is already approved).
- Close your loan quicker
More on Pre-Qualification
LTV and Debt-to-Income Ratios
FICO Credit Score
Self Employed Borrower & No Income Verification Loans
Source of down payment
LTV and Debt-to-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender
is willing to accept in financing your purchase. Lenders are usually prepared
to lend a higher percentage of the value, even up to 100%, to
creditworthy borrowers. Another consideration in approving the maximum
amount of loan for a particular borrower is the ratio of monthly debt
payments (such as auto and personal loans) to income. Rule of thumb states
that your monthly mortgage payments should not exceed 1/3 of your gross monthly
income. Therefore, borrowers with high debt-to-income ratio need to pay a
higher down payment in order to qualify for a lower LTV ratio.
FICO Credit Score
FICO Credit Scores are widely used by almost all types of lenders in their
credit decision. It is a quantified measure of creditworthiness of an
individual, which is derived from mathematical models developed by Fair
Isaac and Company in San Rafael, California. FICO scores reflect credit
risk of the individual in comparison with that of general population. It
is based on a number of factors including past payment history, total
amount of borrowing, length of credit history, search for new credit, and
type of credit established. When you begin shopping around for a new
credit card or a loan, every time a lender runs your credit report it
adversely effects your credit score. It is, therefore, advisable that you
authorize the lender/broker to run your credit report only after you have
chosen to apply for a loan through them.
Self Employed Borrowers & No Income Verification Loans
Self-employed individuals often find that there are greater hurdles to
borrowing for them than an employed person. For many conventional lenders
the problem with lending to the self-employed is documenting an
applicant's income. Applicants with jobs can provide lenders with pay
stubs, and lenders can verify the information through their employer. In
the absence of such verifiable employment records, lenders rely on income
tax returns, which they typically require for 2 years. An alternative for
a self-employed borrower who cannot demonstrate two years of sufficient
income from their tax returns would be a limited documentation or reduced
documentation loan.
Source of Down Payment
Lenders expect borrowers to come up with sufficient cash for the down
payment and other fees payable by the borrower at the time of funding the
loan. It is generally expected that these funds be borrower's own saving,
although a borrower may receive non-returnable gifts towards down payment
and other loan fees.