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Buying a Home and Getting a Loan - What Banks Look At

This information will help you to understand what banks are looking for when someone applies for a loan when buying a home.

Buying a home and getting a loanYour FICO Score  -   A FICO score is a credit score developed by Fair Isaac & Company to help lenders determine the risk involved in lending money to someone who is applying for a loan. It is one of the most important things lenders use to help determine eligibility as well as specific amounts, rates and terms that can be offered. FICO scores range from 300-850. The higher your score, the less risk there is in lending to you. There are some factors that influence your credit rating, i.e. your payment history,  more than others.  Your score can change frequently as new credit is established or paid down/off.  All factors can be grouped into 5 main categories:


•Payment History – Do you make your payments on time? Since this determines about 35% of your score, it is obviously in your best interest to make all of your payments on time.  They take into account: credit cards, car payments, mortgages, student loans and other loan types. Other items such as a bankruptcy are included in this group too.


•Outstanding Debt – Most people have debt but what FICO measures  is how much debt you have.  The outstanding balances for credit cards, car loans, mortgages, etc. will determine  about 30% of your score.  If you can significantly pay down or pay off credit card debt, this will really help during loan approval. But don’t close accounts that you pay off – leave them open.
•Credit History – How long have your current accounts been opened and how long has it been since you used each of them? This usually determines about 15% of your score. If you don't have a credit history yet, you should establish a few credit accounts and be sure to always pay them on time. The less credit history you have, the less you'll be able to borrow.  
•Pursuit of New Credit– Every time you apply for credit, there is an inquiry note placed in your credit file. FICO looks at how many inquiries there are and how recent.  If you recently applied for a couple of credit cards and a new car loan, you may want to hold off applying for a home loan for a few months. Each inquiry may slightly reduce your FICO score.  This usually accounts for about 10% of your total score.
•Types of Credit in Use – How many types of accounts are reported for ATM cards, car loans, credit cards, travel accounts, or any other type of account where payments are being made? This makes up about 10% of your final score as well.


Once your bank is aware of your FICO score they may or may not choose to share this information with you. Assuming they do share your score with you, it is important to remember the higher the score, the more likely you are to obtain a loan. And a higher score also means you will be able to get lower interest rates.  
A high FICO score is not the only determining factor in getting loan approval. There are additional factors are considered in the approval process as well. FICO scores aren't as important in FHA loans as with conventional loans.  Some of these other factors include:

    * Income – Your current income is a significant factor in determining loan approval. Pay stubs for the previous two months as well as W-2 forms for the previous year will be requested to help determine your ability to repay the loan amount.
    * Employment History  - which can tell a lender a lot about your stability. If you are constantly switching jobs, this might  raise a red flag. However, for some people there are other factors that influence your employment length (such as a spouse in the military) and some lenders may choose to ignore this factor.
    * Down Payment – The amount of money you have to provide a down payment is extremely helpful getting a loan.


The important thing to remember is that no matter what your FICO score, employment history or income level, there are things you can do to help improve your chances of obtaining loan approval. Get referrals to local non-profit credit counselors or financial advisors to help optimize your resources fully.

Important note:  It is best to get your finances in order, including working on improving your credit scores, before you get serious about looking at homes.

 

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Newest Riverside, Corona and Eastvale listings

$699,900
3 Beds 3 Baths IG22097521 MLS Active Status
Dreaming of a home where you can simply move in and unwind? Stylish and modern, this upgraded Sierra Del Oro residence offers comfortable living in a highly desirable location and highlights panoramas of the Cucamonga and Chino Valley skyline. An exceptional voluminous layout is enhanced by a customized wide-open design to open up all living areas to the kitchen. Luxury abounds inside this fantastic home with distressed hardwood floors paired with 6-inch baseboards, crown moldings, plantation shutters, an entertainment center, modern lighting, and renovated bathrooms. Premium stainless steel appliances, including a 36-inch professional-grade range and hood and a microwave drawer, equip the home chef in the custom kitchen. Bespoke cabinetry pairs with granite countertops and glass backsplash, highlighting the soft-close mechanism and pullout drawers. You will cherish the absolute privacy from the primary suite with only a nature belt behind and overlooking the unobstructed city skyline and mountain views from its exclusive balcony. Vaulted ceilings, black crown moldings, a walking closet, and a redone ensuite bath with premium finishes complete the well-appointed owner's suite. Breathtaking panoramas are admired in the backyard that borders nature surroundings for a serene outdoor setting. Bonus perks include a loft located upstairs, built-in speakers and an entertainment center in the family room, custom draperies, and window treatments. The home is only one exit away from Orange County's main attractions and shopping and just minutes away from freeways, toll roads, expressways, and the Metrolink. Come for a tour while you still can!

1549 San Rafael Drive Drive, Corona

Listing courtesy of Listing Agent: Nolasco Blandon from Listing Office: Compass

$899,999
4 Beds 3 Baths SW22095935 MLS Active Status
Welcome to 2108 Adobe Avenue! This stunning SINGLE STORY home sits on a lot over 15,000 square feet with beautiful views and NO HOA! The front yard features a spacious driveway with extra covered parking on the side of the house, and a well built four tiered planter bed that runs parallel to the side of the home. Step inside through the front door and you will be greeted with plenty of natural lighting, immaculate hard wood floors, and a welcoming living room complete with a sliding door to access the backyard. As you enter into the kitchen you will observe an elegant raised ceiling set with recessed lighting, tile counters, and a stainless steel sink with views to the front yard. This home also features a massive permitted BONUS ROOM addition which is set with a mini bar, three ceiling fans, a cozy fireplace, and an abundance of space with endless possibilities. Entering into the hallway you will find ample amounts of lighting, linen storage, and two full bathrooms! Each bedroom has its own ceiling fan, accent trim on the walls, and large shelving above the mirrored closet doors! Come into the SPACIOUS primary suite equipped with dual ceiling fans, a DEEP walk in closet, and tub-shower combo. The backyard offers spectacular views of the city and mountains from your very own rooftop deck with spiral stair case access! No immediate rear neighbors along with ease of maintenance make this backyard your own private getaway! Short drive to dining, movie theater, bowling, hospitals, and other city conveniences.

2108 Adobe Avenue, Corona

Listing courtesy of Listing Agent: Ashley Cooper from Listing Office: First Team Real Estate, Tem

$1,000,000
5 Beds 3 Baths LG22102122 MLS Active Status
PRIVATE POOL, GATED COMMUNITY AND NEWLY LANDSCAPED! Welcome to temescal heights, a beautiful, tucked away community in a very pleasant and quiet neighborhood. Beautiful landscaped front yard with dual cypress trees aside the front door. Walk up through your private entrance and be greeted beautiful wood flooring throughout and a well lit office or den on your right. On your left you have the one downstairs bedroom with its own guest bathroom and linen cabinets outside. As you walk down the hall you’ll see the open concept connecting the dining room, kitchen, and family room. The kitchen comes equipped with high end appliances and an island with electrical outlets on the outside. The family room has a fully built in entertainment system and a gas fireplace to enjoy those cozy nights together. You’ll also notice newly installed Baseboards. Upstairs you have 4 more bedrooms one guest bedroom with it’s own front deck! Another guest bathroom and conveniently placed Laundry room right by the master bedroom. The master bedroom has it’s owl large deck over looking the back yard. Master bath has dual sinks separated by the tub. There’s also a private shower around the corner. Go back down to the very large three car garage and another side exit to the side yard. The backyard has been very recently newly landscaped with rocks and a newly installed gazebo. Heated pool and jacuzzi and the best part is no home behind you! Gorgeous view of the trees. This community is very conveniently located just close enough to get easy access to the 15 freeway without the noise and right across Temescal Canyon you have many shops and restaurants to enjoy! The home has been freshly painted throughout. Don’t miss this amazing opportunity!

4359 Altivo Lane, Corona

Listing courtesy of Listing Agent: Alec Bradford from Listing Office: Engel & Voelkers

Based on information from California Regional Multiple Listing Service, Inc. as of . This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.