We recently sat down and talked with Kendra Graybeal, a loan officer with Evergreen Home Loans. In our conversation we talked about some of the mysteries and misconceptions about lending and financing a new home. Check out the video here. Below are the highlights from our conversation.
Meeting with a Lender
We try to make the experience more of a relationship rather than a scary intimidating process. We are here to work with our clients and help them get into a home whether that takes thirty days or a couple of years from now. We are here to help make the process easy and provide the customer with step-by- step instructions based on whatever their timeline is in order to help them get into a home.
When we meet, we’ll go over the customer’s information and then pull the customer’s credit score. This process includes collecting the customer’s documentation to complete the pre-approval process for a home loan. Or, if they aren’t ready to purchase a home, we’ll help them work on building a plan so they know exactly what’s next in the process and how long it’s going to take for them to buy a home. Typically no matter where the customer is financially we will work with them and help them build a credit plan that gives them step-by-step instructions for exactly what needs to be done and the timeline that it’s going to take us to get them from point A to point B. In the end, we’ll work with the client to get them pre-approved for a loan and get them to the point where they know they are ready to purchase a home. The plan is like a checklist that helps the customer know exactly where they are at in the process and what’s needed in order to prepare for a home purchase.
Credit Score Misconceptions
Unfortunately, there are still a lot of people out there that think they need an 800-credit score and a huge down payment in order to qualify to purchase a home, but that isn’t the case. In fact, there are many loan programs available where a customer can qualify for a home loan with a lower credit score. Take FHA and VA programs for instance. These programs will let you go down to a 580-credit score. However, they do require a little more in a down payment if your credit score is in this range.
Typically, Evergreen can work with the client to help them get their credit score up within thirty to sixty days. It’s better if the client works to raise their credit because the higher the credit score the better the options are on loan rates. So, a 580-credit score is low, but a 600-credit score is really where we’d like to see credit scores and anything above a 640 score is the sweet spot because that’s the range where the client could possibly qualify for some down payment assistance programs and other benefits that might be helpful in getting the customer into a home.
To help with the qualification process we can use a credit simulator. This is where we plug in all the customer’s information from their credit report. Then we use the simulator to play with the borrower’s credit score and check to see if we certain changes what will happen with the credit score, etc. We can do this with all three credit bureaus, Experian, Equifax, and Transunion. This gives us a really good idea of what each of these companies are looking at with the customer’s credit score since the algorithms for these companies are all different. This helps us make sure the customer’s new mid-credit score is exactly where it needs to be.
So, with an Idaho Housing Loan for example, how much can someone realistically get into a home they’d like to purchase? A customer could get into a home for as little as half of one percent down. So, if they are purchasing a $300,00 loan, they would pay $1,500 out of their pocket to get into a home, which is typically less than what they are paying in rent. Also, this is less than what they will pay in earnest money as well. Bottom line is there are programs available out there that offer down payment assistance and closing costs so there are a lot of options for people when it comes to getting into a new home.
What kind of documents are needed?
Pay stubs if they are working for someone else. W2’s and tax returns, usually the most recent two years. You’ll need 30 days of pay stubs, usually two months of bank statements, if they are self-employed their business returns. There are some other documents we may need to ask for like bankruptcy documents or child support documents, etc. Typically, it is not a lot of document’s we need for the application process.
What does pre-approval and pre-qualification mean?
Pre-qualification is where they pull the borrower’s credit and we go off what they told us their income is and what they have in the bank. Pre-approval is where we’ve looked at everything. We’ve pulled their credit, we look at their income, we’ve gotten their verification from their employer that they are employed, verification of rent payments, bank statements to show what funds they have available, etc. Then there is a fully underwritten pre-approval on conventional VA and FHA loans. Evergreen will also guarantee to the seller that if for some reason the loan does not go through, they will give the seller $2,000 from Evergreen. This sometimes can help in a multiple offer situation and could give the client a one up on some of the offers on the table. Sellers should make sure that a buyers’ offer should be a pre-approval, not a pre-qualification.
How to Start the Home Loan application process?
You can go online to https://www.evergreenhomeloans.com/loan-officers/kendra-graybeal, or try Evergreen’s mobile app to start the home loan application process. If you have any questions, please feel free to give Kendra a call at 208-861-7775.
If you haven’t already purchased a home and are wondering if home ownership is right for you don’t hesitate to contact us. We are happy to connect you with the right people like Kendra to get you into a new home today.