The world of real estate financing is so immense that sometimes it feels counting stars. Where do you start? In a field that the different types of loans are kept in binders that may be as thick as four or five inches, and that’s just the first one. Luckily for us we don’t need those binders. The number of loans that will take care of the majority of us may total 25 or less. In our example instead of counting stars we’re just looking for planets. So when you hear that a lender has access to hundreds of programs, WHO CARES!
In the process of buying a home the two area’s that can make or break a buyer in are picking the right real estate agent and then choosing the right loan in that order. These two decisions can and will make or break a dream. After picking your agent you and the agent should be intricately involved in helping to pick the loan, loan officer and company that will provide the financing. The agents experience and familiarity with loan products and loan providers is essential to keeping the buyer safe and not sorry. I have been involved in over 95% of my clients financing decisions if for nothing more than to compare notes to make sure we are on the same page. A buyer and their real estate agent should spend more time in this area than any other.
Most people think that the price you pay for the house is the most expensive mistake you can make buying a home but they are sadly mistaken. It’s the loan baby it’s the loan.
If you pay $5000 to much for the house that mistake will cost you $30 a month till you sell the home at 6% interest. If you pay a 1% to high interest rate on your loan on a $100,000 loan it’ll cost you an extra $60 a month for the length of time you own the home. When your shopping for your loan expect help from your agent, ask questions till you get it and you’ll do just fine. Let’s get started:
The first thing we need t do is break down the different types of classifications of loans. They may range from “A” paper (you fit most of the lenders criteria), to “B” paper (you don’t fit most of the lenders criteria). “A” paper loans have the best interest rates and the lowest closing costs and the cost of business goes up from there on a sliding scale. the sliding scale can go all the way down to “G” paper but we will only discuss “A” and “B” paper. Remember that the sliding scale can always go up with a generous amount of cash available to put down on the house
Let’s talk about what the lender is going to look for when they are evaluating you for a “A” paper loan. Again the two main categories of loans are “A” and “B” paper loans. In this section I will be listing “A” paper requirements. First I will list the area of your lifet they are looking at and then describe the ideal “A” applicants resume. If the applicant does not fit the criteria I will note if they would be eligible for “B” paper consideration.
- LENGTH OF TIME ON THE JOB
The lender would like to see that you have been on the job for at least a year and preferably for 16 months or longer.
They make exceptions for:
People who have just gotten out of school and the job is wht they studied
People who have changed jobs but the new job is in the same industry
People who have a new job because the last one laid them off, let them go in a reorganization, or any other similar situation with the exception of that they quit.
People who have relocated because of a spouse
Mothers who’s previous job was homemaker
People who are retired and live off a pension, disability, SSN, or other investments
People who had previously lived in New Orleans
What the lender wants to see is job stability. Owning a home requires paying for it and it’s a tough thing to do when you can’t or refuse to hold steady employment. But even with this statement being made there are loans that do no require the verification of
a job. But the cost of business will go up. For this type of loan see the “B” paper info