Mortgage Planning Tips

Many buyer’s are ready to do their part to revive the economy but are finding out that despite a good credit score, full income verification and an ample down payment they cannot get a loan.

The denials are occurring for a wide array of reasons: the buyers’ incomes are adequate but irregular; they are self-employed and take many deductions, reducing the taxable income on which lenders focus; their credit scores are below the cut-off point, which has been raised drastically; their down payments are less than 20 percent.

Mortgage Brokers and Bankers say if you’re self-employed, you have virtually no chance of getting a mortgage now unless you are working with a real professional and begin planning for the purchase well in advance to make sure that you can meet all of the tightened underwriting guidelines.

The credit pendulum has swung too far. Whereas lenders were much more accommodating even 6 months ago, getting your buyer approved and funded will require full adherence to all Fannie/Freddie underwriting guidelines. Fannie Mae, the government-controlled company that buys mortgages, is so dominant in the lending market that its rules set the standard. It recently toughened its policies, saying it would count only 70 percent of the value of stocks and mutual funds when calculating a buyer’s assets. Previously, that figure was 100 percent.

To insure a smooth and successful transaction it is crucial for buyers to work with a local Mortgage Professional well in advance of any purchase to prepare the file for underwriting so that any potential issues or red flags can be corrected. Failing to address such issues in advance may result in the underwriter issuing a loan denial or developing a biased against the borrower’s file that will be hard to overcome.

By Todd Baker. Todd Baker is a resident of Prosper, Texas and a Certified Mortgage Planner. To comment or for additional information please send an e-mail to tbaker@imortgageplanner.net or call 982-890-9155.