A MORTGAGE expert has revealed his top tips for successfully getting a loan in today’s high-inflation economy.
Brian McCauley has spent the past 17 years working in the financial services sector and came into the industry three years before the 2008 crash.
McCauley, founder and owner of Dallas Mortgage News, said despite there being a lot of doom and gloom about inflation and interest rates it currently is a “great time” to buy.
“Even though interest rates are up, it’s actually a great time for buyers to get a home,” he exclusively told The US Sun.
“Yes, the rate and payment aren’t ideal but that rate is temporary and refinance options will be available in the next 12-24 months so they can lower the rate and payment.
“During a ‘cooling’ housing market, it gives buyers the upper hand now that more inventory is available.
“Not only can they ‘find’ a home but the opportunity to get a discount on the home, via the price, seller paid closing costs or repairs at seller’s expense, is almost at an all-time high so the opening for buyers is definitely there.”
He went on to explain the things mortgage companies look at to determine someone’s eligibility and qualifications for a loan.
Preparation should include having a clean and steady job history of at least two consecutive years and making sure your credit score and credit profiles “are as strong as possible,” McCauley said.
Beefing up liquid assets like savings, 401k, and stocks are also looked upon favorably, as is having all of your most recent two years of financial documents like W2s, tax returns and pay stubs.
“Not only will this reflect better on your loan approval when that time comes, but it will also make it easier on you after the fact because there will be less paperwork to acquire resulting in less unintended consequences and a better home-buying experience along the way,” he added.
“Essentially, you have to prepare like you would for a job interview. Preparation is key and it’s just like the old saying ‘if you fail to prepare then prepare to fail’.
“I have seen so many people who could have gotten a mortgage be turned down because they either didn’t get all their paperwork in order or thought that there was no way the bank would refuse to lend them money.
“In the pre-2008 crash days, banks were handing out cash like candy. But that laissez-faire attitude helped trigger a global recession and things have significantly tightened up since then.
“We are also coming out of a period of record low-interest rates which is making borrowing more expensive.
“With all that in mind, if you think you can just waltz in and come out with a $400,000 loan then I am afraid you are sadly mistaken.
“Banks are very cautious about how they lend money and if you want to have the best chance of successfully landing a loan I suggest you follow my advice.”
McCauley suggests that prospective buyers always get fully pre-approved loans before they go shopping for homes.
He also recommends people “take a homebuyer education course to help you learn about homeownership” to help avoid common mistakes or overpaying for a property.
“Give yourself at least 90 days from start to finish so nothing is rushed,” he added.
“There is nothing worse than having to scramble about to push through a sale.
“It’s stressful, leads to mistakes, and can result in a sale falling through with you losing thousands of dollars in the process.
“If you do the groundwork at the start all that can be avoided and you’ll know your exact budget so you won’t risk overdoing yourself.”
McCauley also recommends setting personal financial goals that include an ideal monthly budget.
This should include “an amount of cash you are comfortable parting ways with”.
“Just because you can ‘qualify’ for that home, doesn’t mean you should,” he said.
“If you’re paying so much of your monthly paycheck on your house that you haven’t got money for anything else then it’s a problem.
“That will start eating into your quality of life and pretty soon could cause other issues.
“There’s nothing to stop you from buying that house or a similar one in say five years when you’d be able to afford it more comfortably.
“But – like with anything – overstretching yourself rarely works out well.
“I would also say, always get a second opinion on your home loan advice and terms to make sure you are getting the overall best option.”
Here are his top tips:
- Get fully pre-approved before you go shopping for homes
- Give yourself at least 90 days from start to finish so nothing is rushed
- Take a homebuyer education course to help you learn about homeownership
- Set personal financial goals, i.e. ideal monthly budget and an amount of cash you are comfortable parting ways with. Just because you can “ qualify” for that home, doesn’t mean you should.
- Get a 2nd opinion on your home loan advice and terms to make sure you are getting the overall best option
- Open any new credit lines
- Change employers
- Move money around or make random deposits into your bank accounts
- Take advice from anyone who is not a licensed and experienced mortgage professional
- Over stress about it. Follow the process, enjoy the journey and have fun along the way