Qualifying for a Loan in Today's Market Doesn't Have to be a Mystery
Weichert Financial Services provides insight to help consumers understand that mortgage money is still available for qualified borrowers
June 17, 2009 // Franchising.com // Morris Plains, N.J., – The cautionary adage "too good to be true" often comes to mind when we first learn of a great financial opportunity. Understandably then some prospective homebuyers might be looking for "the catch" when they hear about the historically low-interest rates currently available to borrowers.
Given the current economic challenges banks and financial institutions are facing, many consumers believe "the catch" is that while it is extremely affordable to borrow money it is also virtually impossible to qualify for a loan. However, the reality is many secure, safe and reliable lenders are ready, willing and able to provide mortgages to qualified borrowers.
"Given the tremendous opportunity offered by today's market, I think it would be shortsighted for anyone interested in buying a home to just assume they will not qualify for a loan," said Stephen Adamo, president of Weichert Financial Services. "The reality is there are plenty of companies still lending money. In fact, we are qualifying approximately nine out of every 10 people who come to us."
To help hopeful homebuyers better understand what lenders consider when deciding whether or not to grant a loan, Weichert Financial Services offers the following insights:
Ability to Repay
One of the first things a lender will look at is the borrower's ability to repay the loan. To determine this they will consider several questions: Is the applicant currently employed? Are they in a steady line of work? Have they earned a similar income in the past?
Typically, a borrower will be asked to provide documentation of their income. Lenders want to see stability both in terms of the position the borrower has held and their earning potential. A prospective homebuyer who has worked for the same employer and earned an income within the same range as their current salary for several years stands a great chance of being approved for a loan.
Granting someone a loan ultimately is based on risk taking. A lender will be far more likely to grant a loan to a low-risk borrower - that is someone with a proven history of paying off debt in a timely fashion - than someone with a poor track record. A person's credit score, or FICO score, is the most commonly used method to evaluate their bill-paying history and debt profile. Credit scores range between 300 and 850. The higher the score the better the chance to qualify for a loan, and at a more attractive interest rate.
Typically, someone with a score of 660 or better is considered to have good credit and is an excellent candidate for a loan. However, interested buyers with a credit score below 660 may often still qualify for a loan or will be able in a short amount of time by taking a few simple steps to quickly improve their overall credit rating.
Stake in the Game
Another factor a lender will take in to consideration is how much money a borrower puts down toward the purchase of a home. The common perception is that someone can't even think about getting a loan today without 20 percent down. This is simply not the case.
Lenders take into account the size of the down payment in relation to the many other factors they consider. If for example, a person has an excellent credit score and tremendous ability to pay back the money, a lender may grant the borrower a loan even with less than the traditional 20 percent down payment.
"Perhaps the biggest myth today regarding mortgages is that you must have 20 percent down. We regularly see people get mortgages with less money down. Recently, we gave a loan to a person who only put 3.5 percent down because he had a great credit rating and a steady, reliable source of income," added Adamo.
Finally, one important factor for borrowers to consider when selecting a lender is the stability of the company loaning them the money. Today's economy has created a more unstable marketplace with stricter regulations and more complex processes. Unfortunately, many borrowers get qualified for financing only to discover that the lender is unable to provide the funding needed for a timely closing.
Homebuyers want to select a secure, reliable lender with a reputation for getting their clients to closing. For example, Weichert Financial Services offers a performance guarantee* to meet a borrower's closing date, backed by a credit up to $5,000, for qualified borrowers who obtain the "core services" of mortgage financing, homeowners' insurance and title insurance from the company.
Weichert Financial Services is one of the "Top 30" lenders in the U.S., according to the industry newsletter "Inside Mortgage Finance," based upon sales to Fannie Mae and Freddie Mac nationally in 2008. The company also ranked in the top five percent in product offerings, according to Radian, a leading mortgage insurance lender. Currently, Weichert Financial Services offers more than 300 mortgage and financial products to meet the unique needs of all of its borrowers. Weichert Financial Services is an equal housing lender.
A family of full-service real estate and financial services companies, Weichert helps customers buy and sell residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. Each Weichert franchised office is independently owned and operated.
*The performance guarantee is subject to change and to certain terms and conditions. Not available in all areas.