Understanding the Potential Homebuyers Pre-qualification & Processing of the Mortgage.

First of all, we must understand .that the loan process may seem routine, but in fact it takes on a life of it's own. No two Borrowers are alike, each buyer is about as different as there are grains of sand in the sea. The longer we are in the business, the more diversity we see.

It basically starts with the initial interview of the prospective clients, along with the real estate agent and the loan officer. The initial interview is designed as a fact-finding mission to see if all the players are on the same page, so to speak. At this juncture, we want to find out how we can help the prospective buyer into a home. We call this phase the Pre-Qualification Stage.

The Pre-qualification stage is to determine what type of prospect we have and if they will meet the test of the type of prospect we want to work with. The profile of prospective clients we want to work with are as follows:

Type "A" Buyer: Is Ready, Willing and Able, With a Sense of Urgency. Clear cut. They are prepared emotionally, as well as, financially. They understand the process, they're motivated to make the decision to buy, and they have sufficient income and have the financial resources to qualify for a mortgage.

Type "B" Buyer: May be Ready in their mind, they may Willing but they may Not be Able. They are fundamentally lacking one of the major ingredients to be a Type "A" Buyer. They may be missing the Motivation or the Capacity of being financially able to maintain a mortgage, or they lack a sense of Urgency.

Type "C" Buyer: Is not Ready, may be Willing (Want to be), but realistically not Able because of circumstances that prevent them from moving foreward. These people will never be ready unless they accept the responsibility for themselves and take control of their circumstances, they often let their circumstances control them. This type of prospect will never do anything unless they win the lottery. They typically are procrastinators, poor credit histories, prone to borrower from Peter to pay Paul. They may often blame others for their own short comings, but lacks courage to accept responsibility for their life, and are prone to the "Give me a Free Lunch Syndrome".

As we go through the maze of Mortgage Financing, what Lenders are looking for is basically someone who can pay the mortgage payment on time.

Pre-qualifying is simply looking deep within the Loan Application, to find out what type of person the prospect is, and determine if the buyer is prepared to make the commitment of owning a home financially. The Basics in Pre Qualifying are as follows:

¨ Stability of Income, and Sufficient to make a mortgage payment.

¨ Debt to Income Ratio within the Lenders guidelines.

¨ Credit Worthiness, with Credit Scores Sufficient to meet the Lender's Guidelines.

¨ A Sufficient Source of Funds required for our Down Payment and Closing Costs.

¨ Asset and Liability Management.

¨ The Security ( The Property ) does not come into play until they are Qualified to Purchase, (SO DON'T LOOK FOR PROPERTY UNTIL YOU HAVE A QUALIFIED "A" BUYER)

In the Pre-Qualification stage, the prospect is required to give enough information, so that at least a 24 month history is shown in it's entirety. This is necessary because ultimately an underwriter will be reviewing the information for the mortgage investor minimum standards. A number of questions will often lead to ask more questions for further clarification purposes.

An Approval, is when an underwiter from the financial institution, who has given the borrower an actual mortgage loan approval based on type of borrower, their qualification, credit, income, source of funds, Loan to Value of the property and the amount of risk to the lender, along with the supporting documentation, if applicable for the type of loan program, the lender is offering. The Funding Lender is ultimately responsible to accept the element of risk, based on the lending institutions own underwriting guidelines, weather it's a fully documented type of loan, limited documentation or no documentation, the element of risk, rest within the hands the underwriter who is the funding lender representative.

Carlos R. Arvizu Sr. pronounced R.V. Zoo

Real Estate Broker/Instructor Prudential California Realty/The MUlhearn Group

562-755-3856