It’s something daunting and exciting that most of us will do at some point in our lives—multiple times. No, we’re not talking about full watches of Peter Jackson’s 4 hour extended-cut of The Return of the King—we’re talking about getting a mortgage.
There’s a lot of myths and fears around getting a mortgage, and for many yet to go through the process it may still seem a bit murky. Today’s feature presenter, B2B member and mortgage banking professional Jeremy Shaffer of Premier Bank wanted to dispel some of those myths. In his presentation, he shared some top worries and laid out the industry’s core evaluation process.
“Is getting a mortgage complicated?”
“No.”
Jeremy Schaffer, Premier Bank
Jeremy started out sharing what are known as the 5 Cs of Credit to provide a good framework for generally what lenders are looking for when considering a loan. They are as follows:
Character
Don’t worry—banks cannot make value judgments based on personal favor or animus! Credit reports are used nowadays to give a more objective look at your past financial activities and perceivable intent to pay.
Capacity
What are your ongoing earnings from all sources? Are those sources likely to continue on sustainably? What other liabilities do you have that might hinder your monthly ability to pay back the loan?
Collateral
What is owned of value that could be put up to secure the loan?
Capital
How much money or liquid assets you have do you have that could be used, if needed, to make loan repayments?
Conditions
What external factors and purpose are driving this loan? Is it being used to purchase a productive and/or highly-used asset—or to be highly-leveraged in an area that where prices may be volatile?
For anyone who did break a sweat reading any of those descriptions—don’t count yourself out—talk to an agent like Jeremy.
The 5 Cs listed above do provide lenders with a broad rubric when evaluating applicants for loans—but they aren’t a definitive checklist. Depending on one’s situation, a solid income can make up for lacking capital, or visa-versa. Issues like poor credit can be improved in time or may be flexed depending on special conditions provided.
Your agent will just need some basic information to give you a free evaluation, including your past two years income and housing history and your current monthly debts. One myth Jeremy highlighted was that many people don’t believe they can buy a house with income from alimony or child support—as long as that income is stable and will be for 3 more years—it is typically okay.
If you don’t think you can afford a house right now; you may be surprised. Talk to Jeremy or one of his local mortgage team members. The first step is an easy online application and your Premier Bank agent will help you from there.
To connect with local businesses and hear or potentially deliver more great information like Jeremy’s, visit one of our meetings and consider joining to become a member!
