A Quick Guide To Home Loans

2011 April 27

Perhaps you ask yourself, “Why must I do all this song and dance just to get a home loan?” Unfortunately, in today’s economy, mortgage requirements are shifting and changing. Work is difficult to find. Employment stability is iffy at best. Mortgage applications are scrutinized and controlled by authorities and lenders. Borrowers struggle to learn the rules and to present a winning argument. Acquiring the funds for a home purchase is difficult but not impossible.

Fifty years ago, transportation was limited, and workers were not enabled to easily move from place to place. Government enforced work regulations also lacked the power and control of modern times. The banks were local, the population smaller, and people called one another by first names. Workers often entered the job market at an early age, and then remained at the same company until death or retirement released them from the assigned duties. Men and women were proud of their job and their reputation. Missing work was not an acceptable option; neither was defaulting on a loan.

Over time, such long-term jobs have become less frequent. Temporary agencies now sprinkle the employment landscape. Job stability continues to shift and decline. In the search for new jobs, hope, and a promising future, people are forced to acquire new skills. Likewise, lenders also adapt to the new environment. Banks have developed a profile of the ideal borrower, yet they still seek the workers of yesteryear, the men and women who find one job with one company and stick to it year after year. Workers with a history of employment changes are seen as a risk, even a gamble to the lender.

Upon a review the legislation boundaries that require banks and other lenders to take responsibility for granting a line of credit, it is easy to understand the lender’s position in the matter of borrower approval. When it comes to a borrower’s employment history, lenders must make certain that their decisions are based upon the letter of the law.

A creditable, or valued, borrower is generally seen as a person with a stable income and a good debt-to-income financial management ratio. These figures provide the bank or mortgage company with a “big picture” image of a client’s credit worthiness. As with any relationship, time and long-term stability builds trust; it is the same with your lender of choice.

In order to begin the loan process, a mortgage hopeful needs to consider the following bank protocols and best practices:

  • The lender prefers that the perspective borrower have a minimum two-month history within their present job field. This time range is hopefully linked to the same occupation and same employer. However some exceptions can be made depending on the bank’s lending policies.
  • Given that the worker may be in compliance with occupation and work history requirements yet still be new to a given employer, probationary employment conditions may apply. The typical lender demands that a perspective borrower be free of any probationary employment restrictions.
  • The prospective borrower must list and explain in full any job changes that affect their ability to repay a loan.
  • The prospective borrower should prepare an accurate and verifiable list of any personal assets that can serve as loan security. This can help the applicant better balance and qualify the income ratio to the loan amount.
  • The typical lender does not penalize mortgage applications for progression to an alternative job within the same industry and/or company.

The economy has caused changes in the way people are employed in today’s world. Contractual and part time jobs have become the norm. In many events, applicants with limited time on a new job are still able to evidence a strong work history. When this is supported by verifiable maturity in credit management that is free of defaults on prior loans, most banks will be lineate judgment in the matter.

IRAs, savings accounts, and wise investments also establish borrower creditability. Even when a borrower is weak on employment history, a strong record of sound money decisions can often shift the scales toward a favorable decision. However never mistake, kindness for weakness; when granting credit to any client, all assessors must uphold bank protocols.

Lenders must consider a borrower’s overall financial picture. Supply them with timely and accurate information. Be honest, but careful with word choice. Practice strong work habits. Be thoughtful concerning job changes. Plan for future financial needs. Live within your current means. Such habits will promote a lifestyle that helps satisfy the long-term lending protocols of any bank or mortgage company.

Live in a manner that enables a loan officer to facilitate your transition from dream to home ownership.

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