Get Mortgage Smart! What you must KNOW…

Allison Gervais

To qualify for a mortgage TODAY!

A few years ago, lenders were giving out loans like candy.  Not so fast today. Since the mortgage meltdown, lending guidelines have become very strict and banks are asking for detailed documentation and pristine credit ratings from potential borrowers.
by Allison Gervais

Today…Mortgage Bonbons have Turned into JawBreakers!

Rates remain at historic lows (as of November, 2009, the 30 year fixed is in the 4% range) and with the first time homebuyer $8000 tax credit…this a great time to buy or refinance your home.  But what about those jawbreaker requirements to qualify for a loan?

Yes, the guidelines are stricter, but the main thing is to educate yourself so that you can prepare for the approval process.

What are the New Mortgage Qualification Requirements?

Here are the preliminary questions a mortgage broker or bank would ask you and the answers they are looking for:

1. How much do you plan to use for a down payment on a purchase transaction?  OR…

 How much do you owe on your loan(s) and what is the value of your property?

Lenders have cut back on the percentages they will lend.  Generally they want to see 20% equity in your owner-occupied property once the loan is in place.  For non-owner occupied investments, lenders are requiring 25% or more in equity.

The exception to refinance transactions is the Making Home Affordable program rolled out by the government.  This program enables homeowners with a conforming loan owned by Fannie Mae or Freddie Mac to obtain higher loan amounts with regards to the appraised value.  For purchases, FHA loans allow a small down payment of 3.5% with loan amounts up to $729,750.

2.  What is your credit score?

A score of 740 will qualify you for the best rates on the market.  680 is the standard and there are a few programs allowing as low as 620. 

Good credit is imperative.  Lenders want to see 4-5 active accounts reporting on your credit report for at least 2 years.

3.  What documentation is required?

Lenders no longer offer No-Verification (stated income) loans.  Here’s a basic list of what is now required:

  • Proof of Income:  If you are a salaried employee with less than 25% of your income in commission or bonuses, you can simply provide your past 2 years W-2 slip and the most recent pay stubs covering the past month. 
  • If you are self-employed, or your compensation package is primarily commission/bonus income, or you have rental property income; you will need to provide all pages of your past 2 years tax returns. 
  • Savings/Retirement 2 months statements, all pages.  Lenders want to see the down payment money and “reserves” (savings after the loan is closed) in your account for the past 2 months. 
  • Appraisal Report: Appraisals are required to be ordered through an outside management company and typically paid up front with a credit card. 

Home Sweet Home

Real estate is a good investment and NOW is considered an excellent time to purchase property or refinance existing loans. Before you head out the door to go house hunting…be sure and find out the loan amount you qualify for.

The best way to do this is to talk with a professional mortgage broker.  And note…Pre-approvals should be offered at no cost or obligation and typically take 1-2 days.

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Category: Real Estate

About the Author (Author Profile)

Allison Gervais is a Senior Mortgage Consultant with Guarantee Mortgage Corp. She offers residential and commercial financing.

Allison is also a Certified Divorce Financial Analyst. She became passionate about mediation and divorce transition coaching services after experiencing it first hand. Trained by the NCMC in Mediation and specifically divorce mediation, she uses her expertise to assist clients with the equitable division of assets.

To learn more call Allison at (415) 218-5401 or e-mail Allison for more information.

Comments (5)

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  1. Debbie says:

    Hi Allison,

    Thanks for sharing the latest info on getting a mortgage. It’s really helpful.

    But I am confused on what credit score I should be paying attention to. It seems that there are a couple of different kinds or ways that credit scores are calculated. Which one do the banks and mortgage companies use?



  2. Allison Gervais Sofnas says:


    Great question! There are 3 bureaus that report credit scores, TransUnion, Equifax and Experian. There are slight differences in scores between the 3 agencies because some accounts and information may report on one bureau and not another.

    Lenders pull all 3 scores and use the middle number, NOT the average. If you are curious about your credit score or need to repair credit, it’s important to obtain all 3 reports. You are entitled to a free credit report from each bureau every 12 months, if you are unemployed and plan to seek employment within the next 60 days or if you have had an adverse action on your report. Go to the credit bureaus’ websites for more information.

    If you are in a rush to obtain your report or have already taken advantage of a free report, there are several online services that will provide one for you instantly for a nominal fee. Just be sure you order all 3 bureaus and the report includes your credit score.

    Allison Gervais Sofnas
    First Capital Group, Inc.
    Mortgage Financing

  3. [...] send lists of items needed to get a loan closed.  These days, lists are 2-3 times as long as in the [...]

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  5. Read the Full Document

    How to Qualify for a Mortgage Today! | SF Bay Area Woman’s Journal

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