Hector Amendola

For more than a year now, I've repeatedly heard Lenders and Realtors discuss going "Back to Basics." But exactly what does that mean? For lenders like myself, going back to basics means really going back to what we each first learned when we started out in the business. The Four C's, Capacity, Character, Capital and Collateral. The four C's are also known as Income, Credit, Assets and Property. They're described below.

Capacity - Homebuyers need to have stable jobs (2 years) and adequate income. It's also important to remember not to overstretch yourself.

Character- Your history in paying bills will be scrutinized. Its important you can explain derogatory and show good trends.

Capital - Down payment is required for most purchases now days. It also gives you an edge over other buyers

Collateral - Soundness and quality of the home is important. The price has to be right and the value has to be there.

A good analogy is to look at each of the C's as a leg on a chair. If you miss one, you end up wobbly and might need to do some fixing before you're ready to buy. In addition to being ready to buy, there are other do's and don'ts to take in to account.

Do have your paperwork in order. Essentially, one month of paystubs, two years of W-2s and three months of bank statements will be needed. Additionally, special situations require some extra documents. If you're divorced, the settlement paperwork might be needed. We might also need bankruptcy papers for those who filed in the past and deferral confirmation for deferred loans. Self Employed buyers will need to present two years of tax returns.

There's also some don'ts to consider.

Don't increase debt or open new accounts and don't make late payments. Especially mortgage or rental payments. Even if you're refinancing, there's really no such thing as "skipping a payment." You'll pay interest on borrowed money until the day its paid off.

Hope this is informative to any potential homebuyers or Realtors still adjusting to our current market.

Best regards,

Hector A