Purchase and Construction - The Qualifying Process

What the bank needs to know to price your loan

For Worldwide Capital Mortgage Corp, is very important that our customers understand the qualifying process for purchases and construction Loans.

Borrowing money is different than other financial transactions in that the risk to the lender is ongoing so long as the loan exists. This means that the bank's profit margin is not calculated solely on cost to provide the borrower with the service less the cost of the product as in other purchases.

In the case of a loan the qualifications and history of the borrower, the amount of investment by the borrower and even property type and occupancy status of the property being collateralized are weighed to determine a unique risk profile for each loan. Every aspect of the transaction is carefully considered before a bank makes any solid offer for interest rate or closing fees.

Here are the factors considered by the lender in pricing your loan:

Transaction type-What are the customer's needs?

ü      Purchase of existing property that has been built recently.

ü      Purchase of property currently being built by a builder or about to be built.

ü      Land Loan i.e. buying undeveloped land for later development.

ü      Construction on land borrower already owns.

Income type-How is the customer showing income?

ü      Employed with verifiable income-Works for same corporation more than two years. Showing two years W-2's, last two pay stubs and tax returns if necessary.

ü      Self employed verifiable income-Owns a corporation, partnership or sole proprietorship. Has filed business tax return for at least two years. Can show other evidence of self-employment such as business license or CPA letter.

ü      Stated Self Employed- Can prove self-employment for at least two years, but is unable to show adequate income on tax return to make debt to income ratio parameters. (Increased risk for lenders)

ü      Stated Wage Earner- Works for company and may have other undocumented income but is unable to verify enough income for debt to income ratio parameters. (Additionally increased risk for lenders)

ü      Stated, Stated- Unable to provide any employment or income information of any kind. (Significant risk for lenders)

Credit grading-What credit history can the borrower present to the lender?

ü      Lender considers scores of borrower 450-850

ü      Lender looks at all mortgage histories for lateness and defaults on past and present loans.

ü      Lender reviews catastrophic credit events, if any, such as Bankruptcies, judgments, charge offs, collection accounts, state and federal tax liens, child support etc. All outstanding balances on past catastrophic credit events are weighed based upon regency and severity. Any unpaid balances are usually required to be paid off prior to closing on additional loans.

ü      All other non-catastrophic adverse credit events are considered also based upon regency and severity.

Down payment-What percentage of the purchase price is being put down towards the new transaction?

ü      Worldwide Capital Mortgage Corp. offer different programs with no down payment and no upfront fees; but sometimes if the borrower decided to make a down payment it would help the get a better pricing for the loan.

ü      Lenders mitigate risk on low down payment loans by requiring a borrower to pay PMI insurance or breaking loan into two parts called piggybacking.

Occupancy status-What will the occupancy status of the property be?

ü      Owner occupied

ü      Vacation home

ü      Non-owner occupied rental investment

Assets for down payment- How much in verifiable sourced and seasoned liquid asset are available at the time the contract is signed?

ü      Need copies of bank statements from checking or savings

ü      Need copies of 401k, 403B or other deferred compensation account being used.

ü      Need copies of Annuity, IRA, mutual fund or other investment account.

PITI assets- How many payments of Mortgage Taxes and Insurance will remain in liquid asset after the transaction is complete?

ü      Need copies of bank statements from checking or savings

ü      Need copies of 401k, 403B or other deferred compensation account being used.

ü      Need copies of Annuity, IRA, mutual fund or other investment account.

For more information about Home Purchases, you can visit our web site at www.worldwidecapitalmortgage.com or call toll free  1-866-EZ-FUNDZ (393-8639) where you can find different programs with low rates, low closing cost, and no upfront fees serving the needs for all the customers.