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GET FUNDED 101: THREE TOP THINGS LENDERS REALLY LOOK FOR WHEN YOU APPLY FOR YOUR LOAN

Deana M. Devereaux • July 3, 2020

What lenders really think.

How’s THIS beauty to hide away from COVID in?
If I could give you money for a house that looks like this one, would you take it?

Um, OF COURSE you would!! You’re not a complete egghead, right? You would probably mow down a couple of individuals to get to it, I am sure. If you want one like this in CA, however, you’ll need a few million just for the purchase.

Jeez - have you seen the skyrocketing price of homes in CA?

 But hey, you may catch a deal somewhere. However, when finally deciding to purchase a home, there are many other factors to consider other than just the price….safety, location, how close the schools are (if you have school inhabitants) how close grocery stores, banks, gas and fire stations, hospitals, dentist offices and restaurants are, and so forth.


Right now, we are going to focus what lenders and mortgage professionals do when considering a loan for you. The top three things are:

1) Credit/Credit History

2) Income, Assets, and the Ability to Repay

3) Employment/Stability

      These terms may be a little formal, so let me break them down in the true thoughts of a lender.



1. Credit & Credit History.

 It all comes down to that middle FICO score. What is your middle FICO score? Your lowest and highest mean nothing. Has anyone else taken a chance on you? Who? Why should I take a chance? What have you borrowed already? What was the credit limit and what did you pay per month? Did you pay that on time? If not, WHY not? How much debt do you really have? Can you handle more? Will more throw you out of whack for our debt ratio limits?...........Absorb that. How well do you manage what the heck you already have? Were you late on any mortgage in the last 12 months? Man, I hope not, because that’s a wrap for you and low rates. Any prior bankruptcies? Foreclosures? Liens? Anything that should alert me not to give you my money?

2. Income, Assets & the Ability to Repay.

 If I give you money, am I going to have to worry about you paying my money back? First off, do you have money? Are you making any consistent money? How much? Is it mostly comin’ in, or mostly goin’ out? How long have you been making this money? What’s in the bank? Heaven help you if there are a bunch of overdrafts on those bank statements. I need to see that down payment, some reserves and closing costs. Stat. What do you mean right now ? Of course, right now . You are asking for the money right now , aren’t you? I need every page of those bank statements, even if blank. How long has this money been in your bank? Is it seasoned? We are not talking about seafood. Gosh. Seasoned, as in, length of time those funds have been sitting in your bank. If your uncle just wired it all yesterday, as a gift, then we may have a problem. Any overly large deposits? Explain all that, on a letter. We’ll wait. Source where those came from, buddy. Again, is your inflow greater than your outflow? Got any assets, or just debts? Look, if you default on a loan, you got any sellable things I can use to collect my money?

3. Employment/Stability.

 You working? Where? When did you start? What’s your job title? If I google the company, will I find it, along with its phone number and verifiable address? What’s your boss’s name and number? Oh, I’m calling your boss to verify that what you say is true. Believe that. In fact, I am asking how likely will it be that you will keep your job? I need to know so that you can pay me back. Why else? How long have you been working there at this job? Have you had this job consistently for the last two years? If not, WHY not and I need to know exactly where the heck you DID work for the two years before that. What exactly happened? You can have multiple jobs, but those jobs need to be steady. Otherwise, how am I going to get my money back? Wait, you are self-employed? Oh, this is going to be good . Need to see those tax returns, dude! Do not say you make $30K per month and this is not reflected. If you show me all losses, you are done. Finished. I need to see sufficient income for the last two years of tax returns, so I can divide those figures I see by 24 months. I need to know you make enough money per month to support all the debt you have…but let’s be clear. Mine is the most important. I need my money back, with interest. Did I mention that? How likely will it be that your business will bring in this money, so that you can pay me back? I’m looking for stability.

You’re welcome.

 In fact, all the documents that your Loan Officer asks you to turn in, will lead up to the above and more. It doesn’t have to be that bad, though. If your Loan Officer is seasoned and experienced, that officer can help you successfully fly through these issues going in. He/she will have experience in working with different Underwriters and will know what to look for, ask you for and spot potential problems ahead of time. OMG, understanding Underwriters is an entirely NEW subject we need to discuss – the post is coming!

My advice?

 Before even considering a loan, take inventory of your financial, employment and credit situation. You know when something is bad. You know when something looks good. If somebody came to you with your exact profile, would you lend money to them? If your situation looks shady to you, FIX IT.

Fix it all now and for the love of Heaven, wait until it is fixed before pursuing a real estate loan.

The smallest bad detail can cost you an opportunity.

Over and out.

- Deana M. Devereaux

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