The 4 C's of Lending

Whether you're refinancing or buying a home, you'll want to know what lenders look at when approving a loan.

While I'm giving you a rundown below of what I call the 4 C's of Lending, there's several layers to each "C" that come into play (folks who switch employment, kind-hearted people who co-signed for relatives without realizing that the relative's debt also becomes factored into their own debt ratios, astute pennypinchers who pay everything with cash so they inadvertently have no credit history on record, etc.), so my recommendation is to contact me about your own particular situation so I can help you paint a better picture of your strength as a borrower.

CAPITAL
How much money do you have in your checking and savings accounts, CDs, 401k, stocks and bonds? Do you have enough cash for the down payment and closing costs ? (Note: If you don't have enough for down payment and closing costs, I do have Down Payment Assistance programs that you can apply for. All you gotta' do is ask me! -Dez) Do you have enough cash for emergencies?

CAPACITY
How much do you make and can you repay the debt ? A good rule of thumb is that your mortgage payments should ideally not exceed more than 31% of your monthly gross income. (Note: If you need help calculating your debt-to-income ratio, shoot me an email. -Dez)

CHARACTER
What's your credit history like? Do you pay your bills on time ? Have you maxed out your credit cards to kingdom come? What's your credit score? Anything above 700 and lenders will love you. Anything in the low 600's, they'll go, "hmmmm...". Since lenders don't know you from Adam (or Eve), your credit history is the one of the few things they have to go by to determine whether you will repay the debt or not. (Note: Just because your credit score's blemished doesn't mean you're out of the running. Divorces and health crises have ruined many lives financially, and you just need the lender to see the whole picture. -Dez)

COLLATERAL (aka The House)
Lenders will only allow you to purchase a home that you can truly afford. If, after considering all the factors, they determine that your $1,800/month comfort level means being able to afford a home under $200,000, that's all you're going to get approved for. Anything over that would put you in danger of default and foreclosure, and the lender in jeopardy of holding the veritable real estate bag if you can't repay your loan.

Remember, shoot me an email at dezzirae@dezzirae.com or call me at (818) 642-9343 in case you want me to help you determine how strong of a borrower you are, what loan programs are available to you. If you're not as strong a borrower as you'd like to be, I'll give you tips on how to get there.