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@northernilrea, NICREI Feb.2002
Ten Top Factors which Influence a Loan
Obtaining the best loan is more than a matter of luck. Since every situation and every client is different, we recommend consulting with a
professional mortgage broker before you ever look and your first property. There are many factors to consider which may affect your ability to
obtain a loan at the best possible rate and terms. You should be prepared to discuss the following.
1. Application
The loan application (form 1003) must be filled out accurately and completely. This provides the basis for your mortgage broker to begin working on your behalf.
2. Income and asset documentation
Full documentation, stated income/verified assets, stated income/stated assets, no ratio, no doc? The documentation type we use to prove or state your income
and assets can have a major difference in the type of loan, interest rates, and loan to value (LTV) you may qualify for. Full documentation (we prove income
and assets, staying within the debt-to-income percentage allowed) provides the lowest risk to the lender and therefore offers the lowest rates and highest LTV.
Real estate investors often rely on stated or no documentation loans due to self employment or high debt ratios as the result of owning multiple properties.
3. Debt-to-income ratio (DTI)
DTI is the ratio of monthly debt to gross monthly income. The allowable percentage of debt-to-income varies by lender, documentation type, occupancy type
and the type of loan you apply for. The more property you own, the more challenging it becomes to maintain the required debt-to-income ratios.
4. Loan to value (LTV)
The amount of money you finance compared to the appraised value or purchase price will affect not only the interest rate, but the type of loan programs the
lender may offer. The best programs and rates will be for LTV's of 80% or less. Loans over 80% will require private mortgage insurance (PMI) or subordinate
financing (second mortgage).
5. Credit history
Your credit history is a major determining factor in the types of loans you may qualify for. Borrowers with excellent credit will be offered the most favorable
programs with the lowest rates and highest loan to values. Credit repair and maintenance should be a top priority of real estate investors.
6. Occupancy type
Whether your property is considered a primary residence, second home or investment property will affect the interest rate, loan to value and the loan programs
the various lenders may offer.
7. Property type
The property type can affect the interest rate, loan to value and type of loan programs the lender may offer. Lenders tend to prefer single family homes over
2-4 unit multi-family properties; therefore you may be offered a lower rate and higher loan to value. Most lenders have strict guidelines for condominiums,
especially if the condominium project is not complete or has a high number of investor owned units. Financing for unique property types such as condo
conversions, condo hotels, mobile or modular homes, or extremely high loan amounts may not be available through all lenders or may be subject to different
guidelines.
8. Properties you own?
The more real estate you own the more challenging it becomes. Lenders may impose what's known as “maximum exposure” guidelines that limit the number
of properties they will finance for one borrower or the total number of properties they will allow you to own. Mortgage brokers working with investors who own
multiple properties must pay close attention to lender guidelines and which lenders they use for which properties.
9. Real Estate Location
Mortgage brokers must consider the state in which the property is located. Some lenders may not lend in certain states or may not offer the same loan programs.
Some states have strict guidelines regarding second mortgages. In addition, most lenders have different guidelines concerning properties located in rural areas
or properties on acreage.
10. Exit strategy
Having a predetermined exit strategy will help your mortgage broker recommend the right financing. Whether it's a fix and flip strategy, short term hold or a long
term rental, the more your mortgage broker understands your goals and objectives the better they will be able to choose the correct lenders and programs.
Provided by Gladys Gort of Hometown Mortgage, Inc.
An Illinois Residential Mortgage Licensee #4831
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An Illinois Mortgage Licensee #4831
Hometown Mortgage,Inc.
1002B N. Milwaukee Ave. Libertyville, IL. 60048Office: 847-362-4913 Fax: 847-362-4915Broker: Bud Frase - Cell: 847-502-8756Loan Officer: Gladys Gort - Cell: 815-474-8421 
Looking to buy Your First Home, Investment Property, or need to Refinance for Home Improvement, Debt Consolidation? Give me a call or email to see what I can help you with. Phone: 815-363-0233
Email: hometownloans@comcast.net
gladys@yourhometownnews.com
Investors, need help with selling your home's ? Call me!
Do you have a Contract or Lease Option on a Property
your buying or selling? Call me!
Phone: 815-363-0233 Email:
hometownloans@comcast.net
It is a GREAT TIME to BUY CALL NOW! 815-363-0233 $8,000. TAX CREDIT EXTENDED OR CALL: BUD FRASE 847-362-4913 HOMETOWN MORTGAGE
