by joswald
31. August 2009 18:03
"I'd never seen a rain storm like this one. You could hardly see three feet in front of your car window, in spite of the wipers sloshing water back and forth, on high speed.
We had just left the grocery store parking lot when it happened.
I never saw it coming and yet, I'll never forget it as long as I live.
The right side of my car was completely crushed, and while I managed to survive because I was tucked safely inside by my seatbelt, my son wasn't so lucky.
It was literally every parent's worst nightmare -- his car seat came loose because the seat belt wasn't secured properly. And my life has been a living hell ever since."
Seat belts are one of life's little irritants that no one really likes to wear.
However, do you know ANYONE who's been in a severe car wreck and wasn't wearing a seat belt say, "Boy, even though I was thrown from the car...I would NEVER wear my seat belt."
Life has a lot of these little irritating facts that as humans, employees, parents, husbands, mothers, and consumers we just have to deal with or suffer the undesired consequences.
If you're not aware of the current mortgage melt-down then you've either been in the FBI witness protection program, on a remote island for the last 8 months, or just haven't paid ANY attention to the news for the last 8 months.
Banks have tightened down on new loans guidelines so much that it appears they're only looking for people with enough CASH in their bank account to cover the loan...just in case.
What's worse is that we've had many people in the office over the last 60 days that were denied loans, but could have been approved had they taken care of one or two little irritating issues before hand.
That led me to write The 5 Biggest Mistakes People Make to Kill Their Next Mortgage...which of the five will you make?
1. Credit is KING! Right now, unfortunately, the banks are hanging 90% of their initial decisions on what your credit report looks like.
Don't think that's the case? Well, just ask Melanie, one of my current borrowers who was just DECLINED by MetLife because she didn't have (you're going to love this) enough credit lines. You heard right...she was declined because she'd taken great care to save money, not buy things on credit cards, and made sure that she didn't owe anyone anything. As a result, she didn't have the mandatory three trade lines and was not issued the loan.
Make sure you take advantage of free credit reports to spot check your credit every 6 months for inconsistencies or inaccuracies.
2. The days of "No-doc" or "Low-doc" loans are a thing of the past. Remember those days when all you had to do was make a phone call to your loan officer, sign one or two papers, and then show up in two weeks at the closing table? Yeah, well that's all it will ever be now...a memory.
Banks have swung so far past conservative now that they're requiring documentation of everything! For example, I had a borrower who was buying an investment property. The purchase contract was $120,000. This man was a dentist who had a 805 FICO score, owned his business, the business property, his primary home, an additional rental home, his wife's 2008 Toyota Sequoia, and his 2007 Mercedes C class all FREE and CLEAR...as in, paid off, no debt, doesn't owe you a dime...FREE and CLEAR.
Oh, and by the way, he had over $250,000 in his business account. He was also putting $65,000 as a down payment so our loan amount was going to be right at $60,000.
Now, under those conditions you'd think the bank would see this loan as a 'no-brainer', right? Wrong! The bank required him to document the last 6 months of bank statements (personal and business), write a letter of explanation as to why he didn't owe any debt to anyone, and then get a letter from his CPA stating that by paying $65,000 out of his account it wouldn't have an adverse affect on his personal or business cash flow.
Can you believe that?
Yeah, me either. So, when you're getting ready to do a new refinance or purchase loan...just plan on documenting everything....income, assets, and financial history. It's nothing personal, it's just the way the lending industry is these days.
I'll cover items 3 - 5 in next week’s post. So stay tuned.
In the meantime, if you have questions or concerns about something in your financial situation, please give me a call. I'll be happy to schedule a no-cost, no-hassle, absolutely FREE consultation where we can analyze your current situation and help you stay on the right track.
