Morgan Minutes: What is Financing?

In this week’s Morgan Minute, Joel Morgan walks you through the process of financing and shows what lenders look for when evaluating potential borrowers. For other great information on your options, be sure to join in the conversation! Subscribe to our YouTube Channel and follow us on Facebook and Twitter!

Welcome to the morgen minute a place where you can find empowering information that allows you to take control of your mortgage i’m joe morgan chief solutions officer here at options financial last week we asked the question what is financing we’re gonna dive into that today in detail yes it is a means for you to acquire the funds so that you can buy the home before

You’ve actually been able to save up and have your own cash to do so on the flip side of it we have an investor who’s going to be looking at you to make sure that you are a safe investment and what is the likelihood of you to pay back the loan plus interest which is their profit so let’s go into that a little bit and see what that means well when an investor takes a

Look to see are you a safe risk or are you a profitable investment they’re gonna break it down into four primary categories the first category is your credit what they’re looking for is to see what is the history that you have in borrowing money and paying it back in a responsible and timely fashion well they also do want to see what are all the liabilities and the

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Extent that you have overloaded yourself with respond with debt and so all of those individuals throughout that entire process need to make sure that the flow of income coming from you the borrower is going to be able to be passed through they want to make sure are you responsible and will make your payments on time it’s a key thing in getting qualified and being

Approved for a loan the second thing that they’re gonna look at is your income now obviously without an income you can’t pay back the loan so the incomes a key piece as well but here what they want to do again is take a look at the history have you had a job how long have you had a job and what is the likelihood of the continuance of that income moving into the

Future it’s a very crucial piece because oftentimes we have different types of income some people get paid by salary w-2 wages others however get commissioned bonus or they’re self-employed so they’re looking for stability and likelihood of that continuance moving forward to make this decision the third area that the investors are going to look at you are assets

Assets are a key piece to this if you need any funds in the transaction whether it’s a down payment or funds required to close the transaction they want to make sure that these funds you bring in you don’t need to make your daily and monthly payments for various bills it’s a key thing that causes a lot of confusion by borrowers in fact when we look at those assets

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We require sixty months worth of bank statements in today’s market any deposit that is greater than a certain percentage of your income is going to be requested to be verified as a true source of income they want to make sure it doesn’t come from pulling money from credit cards or some other sort of loan that isn’t being documented on your credit report now that’s

Three of the four the four theory is kind of interesting because it has nothing to do with the consumer itself but is a very key component is the property itself well this has nothing to do with you directly you have full control based off the type of property that you purchase now you have every intention of paying back this loan but sometimes life happens maybe

It’s a job loss or something worse in that case you may lose your income and therefore won’t be able to pay back the loan in an unfortunate situation like that the property would revert to ownership of the bank in that case they don’t want to own it they want to be able to turn around and sell that in the marketplace so that they can pay off whatever balance is

Alone that is outstanding so as you look at this it gives a little bit of a different understanding what this process is going to entail yes we walk into it hoping to acquire the fun so we can buy a house but when we put on the shoes of the investor we see here that there’s a lot of risk associated and therefore we the consumer need to make sure that we can show them

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We are a safe investment for them so this kind of takes us to our question for next week what is the golden rule we look forward to hearing your answers by joining us in the conversation at hashtag morgan minute like us on facebook and subscribe to our youtube channel so you never miss one of our informational videos until next week remember your options come from the power of note

Transcribed from video
Morgan Minutes: What is Financing? By Options Financial Residential Mortgage NMLS 829593