February 16, 2023 When we talk to clients and pre-approve them for loans, we run into many scenarios and need to decipher what an underwriter would think and whether or not we believe the scenario will get approved. Below are a couple of examples of what we see every day and have to decide whether these people should go into escrow and buy or be given the hard talk of your story doesn’t add up, and we need to find another way! Potential clients live in Westminster and have a house there that is 1800 square feet. Hubby works in Long Beach; they have three kids and want to move to 2400 Square feet in Valencia and keep Long Beach as a rental. If they sell Westminster, that is a no-brainer, and if the buyers can work from home or 2-3 days in the office, then it is easy. This is a toss-up! The explanation letter will explain if they are making a move or trying to buy an Investment property with Owner Occupied pricing! We are moving to Santa Clarita for the schools, so we have better care for our kids as wifey is starting a new job at X, and Mom lives at 1234 5th Street. An Underwriter can see the motivation and approve the loan based on the factors. Maybe Hubby works at 5am, and it is a straight shot to Long beach in 50 minutes? These are important factors when you submit the loan to an underwriter! The client lives in Sherman Oaks in a single-story 1800 Square foot house. The buyer is retired and in his late 60s, has no debts, and the house is paid for, and he has lived there since the 70s. He is putting 5% down on a 3200-square-foot home in Valencia and keeping Sherman Oaks as a rental. This looks and smells like a straw buyer where the kids can’t qualify for a loan, and they need a big house. The kids probably make decent money, but credit is a wreck! I would beg them to put 20% down, and when that doesn’t happen, or they don’t want to pull a small loan on the Sherman Oaks house for the 20% down, then I know it is a straw buyer. Any decent Underwriter will know it too! A dumb Loan Officer will take in the deal, get it to Underwriting, and get it turned down! Maybe they get a dumb Underwriter here and there and get lucky, but you should NEVER chance it! Buyers made $85,000.00 combined income in 2022, and here we are in 2023, and one buyer got a new job! The job is in a different industry, and the buyer gets a big raise and triples his/her salary! Another red flag? YES!!! I would call the new company and ask for that person. I would do a Google search to see if this is a real company and, if so, how big it is. If it’s a small company, then I would pull to see who the owner is, and nine times out of 10, the owner will be related to the buyer! Shocker!!! I could ignore all of the signs, or do my due diligence and then question everything before my buyer goes into escrow. This is not an easy conversation, but it can be done if you inquire nicely. One more fun thing to do is to call the former employer and verify that they still work there; the answer is usually yes! This whole file is going to be a mess, and Family employment needs a full year of income (preferably two years), so you can use it! Bad Loan Officer says wow, congrats on the raise and shoves it into Underwriting, to find out that it will not work 15 days later! These are just a few examples of what a good Loan Officer looks for when they do a pre-approval! My team does not start a loan they can’t finish; if there is a question, we want the answers before we say yes! Rates are up slightly again today. The CPI came in higher than anticipated on Tuesday, and we keep ticking up daily. Like my weight in November and December! 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates! Government Loans (FHA / VA) are in the 5’s. Conventional Loans up to $726,200.00 are in the high 5’s, and low 6’s again. High Balance Loans $726,201.00-$ 1,089,300.00 are in the 6’s Jumbo loans above $1,089,300 are in the 6’s 5/1, 7/1, 10/1 Arms are in the 5’s Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score. Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the 8’s. 0 down loans are in the high 6’s- 620 credit score min right now up to $725,000.00. Private Money lenders - hard Money Loans – 35% down! No Ratio Loans 30% down Debt Service Coverage loans with as little as 25% down Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go! Interest rates are subject to change without notice! Above are LA County Loan Limits. I will be around all weekend if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.