Short on Assets or Reserves?

Short on Assets or Reserves?

            If you find yourself short on the assets or reserves you need to qualify, an option would be to ask a relative to add you onto his or her account which has the needed balance or history that you are lacking.  For example, you need $10,000 in assets to qualify but you only have $4,000.  If mom and dad have an account with at least the amount you need and would be willing, they could add your name to it as a co-signer and then your mortgage professional can order a verification of deposit from the bank, showing that the account is in your name, too.  This will satisfy the reserve requirement.  Be aware, though, that the lender may need a letter from the relative stating that you have total access to all of the funds in that account. 

Let this most generous relative know that once the loan is funded, they won’t be able to simply remove you from the account. See my next post for details... and if you can't wait, please feel free to email me jeff@somloans.com and I'll tell you myself.

Don’t Reduce Balances on Your Assets!

Don’t Reduce Balances on Your Assets

Do NOT take money out of your checking or savings account right before you are going to close escrow. If it is just for normal living expenses, you should be okay. Otherwise, don’t arbitrarily take funds out of an account that was used to help you qualify. I’ve seen borrowers that had borrowed their down payment from a friend or relative and, after they were pre-approved, decided to give the money back to their friend or relative in the middle of their escrow period. This is a bad decision because if the lender wants to see a more current bank statement from your account, it could cause a major problem. You should always ask your mortgage professional how much money you should keep in your account until the end. The lenders can request a verification of deposit from your bank at the last minute if they choose. A verification of deposit is a form that the bank has to fill out that tells the current balance in the account as well as the last two months average balance. To be on the safe side, keep as much money in your account as you can until you are informed by escrow that your loan has recorded with the county. FIRST 10 PEOPLE - Email for a FREE copy of my

book - Makers and Breakers jeff@somloans.com

Are You Unable to Open a Checking Account?

Are You Unable to Open a Checking Account?

I have good news and bad news…

If you are unable to open a checking or savings account because you are on CHEX SYSTEMS (a system the banks use to deny you an account due to excessive non-sufficient funds, fraud or check kiting), you might be out of luck.

But you have options! You may have to use a co-signer on your loan in order to show enough assets to qualify. In the past, there were many programs designed for those who could not show assets the traditional way. There were stated income loans, stated asset loans, no documentation loans, no ratio loans and more. For now, however, such programs are unobtainable.

As the market relaxes and guidelines are loosened, those programs will probably be made available again. They may have tighter restrictions than in the past, but they will most likely make their way back in to the system, which would be especially helpful to the self-employed borrower. Do you have a copy of my book, Makers and Breakers? If so, please see the Self-employment Section. If you don’t own a copy, call me today for a free copy! Ask for Jeff 661-964-1320 begin_of_the_skype_highlighting end_of_the_skype_highlighting.

Please visit www.southernoaksmortgage.com let’s get acquainted.

Mattress Money!

Mattress Money! 

How about you? Do you have cold, hard cash in a drawer, under the bed or behind a box in the closet? Many borrowers do. They either get paid “under the table” and don’t want to deposit the cash in order to avoid paying taxes to the IRS or are scared to put their money into a financial institution. The latter was definitely a concern during The Great Depression, but now that the Federal Government insures accounts up to $250,000, it is much less of a concern.

When applying for a home loan, the problem with this so called “mattress money” is that the lender will not count it toward the reserve requirement or down payment. This is the same with gold and silver. Even though these are valid commodities, lenders will not use them. So what is one with such assets to do?

If it is cash that you have, you will have to put it into a checking or savings account at least three months prior to buying a home in order to have at least two months worth of bank statements to show the lender. As far as commodities, they are difficult to convert and typically aren’t counted as liquid assets in a real estate loan transaction.  

If you are unable to open a checking or savings account for any reason, you won’t want to miss my next post! If you can’t wait, call me 661-964-1320 begin_of_the_skype_highlighting  end_of_the_skype_highlighting or email jeff@somloans.com

I Have a Suggestion…

I Have a Suggestion…

  Glad you’re back! Last time we talked, I promised to offer a suggestion for managing your credit accounts.

The right thing to do is to keep long standing accounts open even though you don’t use them any longer. My suggestion is to charge a small amount every few years and when the bill comes in, pay it off entirely. This will keep the account active so the creditor doesn’t decide to close it for you for non-activity. In a few instances, I’ve instructed borrowers who have closed accounts right before getting their loan to re-activate them immediately, after ensuring that the creditor will re-establish the history. If the creditor won’t re-establish credit history, then I recommend leaving the account closed because beneficial credit history has already been lost. Accounts that are in the open section of your credit report will have the most positive effect on your score, especially if they have a very small balance to limit ratio. Once the account moves into the closed section of a credit report, the history is lost. History makes up a big portion of your overall credit score. Visit www.southernoaksmortgage.com

Here’s the Answer I Promised

Here’s the Answer I Promised

Last time I posted about how you might assume that your score would improve since you now have eliminated an account that you could have, in an instant, borrowed against entirely.

I promised an answer. As I said, the reality is different and is two-fold…

 First, if this account has been established for many years, let’s use 15 years as an example, and you rarely use it, you would have 15 years of good credit with limited usage. This works in your favor because you’ve got an established account with a long history of good credit. Second, if you have a high credit limit and don’t use this credit, you’ve shown that you have willpower and can refrain from using credit even though it’s staring you right in the face.

 Thus, the right thing to do is to keep long standing accounts open even though you don’t use them any longer. I have a suggestion. Stay tuned to my next post!

Visit my website and let’s get to know each other! www.southernoaksmortgage.com

Closing Credit Accounts

Closing Credit Accounts 

Assumptions can cost you dollars and time when you’re in the market for a loan. There are deadly mistakes you want to avoid! Some of them include your credit accounts. Listen closely…

It would seem logical that if you have many open trade lines with moderate to high credit limits, closing some of them would improve your score. The theory is that since you have no use for this card or credit line, why keep the account? It seems to make sense to close it. One would assume that your score would improve since you now have eliminated an account that you could have, in an instant, borrowed against entirely. Well, the reality is different and is two-fold.

There is a huge misperception that exists regarding the closing of existing credit accounts in an effort to improve credit scores. Check my next post to discover what it is, or email me directly at jeff@somloans.com Trust me, you want to know this if you’re trying to get a loan!