The perfect architecture, meticulous planning, securing of permits and every other aspect of building a new home can turn out to be all for naught if prospective home builders don’t secure the one necessary tool needed to make it all happen.
As it is with the majority of things in life, it’s all about the money.
Securing funding to make the best laid plans a reality should be handled “immediately” said Carole Hendricks, Jacksonville chapter president of the Mortgage Bankers Association of Florida and branch manager of PrimeLending.
“As soon as you start looking,” Hendricks said.
Hendricks said most loans fall into the category of Federal Housing Administration or Veterans Affairs loans, which are backed by a federal agency. There are many variables, including the amount of the loan and the appraisal of the home.
Applications for loans tend to require documentation on several levels, Hendricks said, pertaining to work history, earnings, expenditures, W-2 forms. And, of course, at some point there will be a credit check.
Approval can be a lengthy process, Hendricks said, which can easily be delayed further if changes arise or new information is revealed.
Hendricks has several points of advice for individuals seeking funding and going through the lending process.
“Do not quit your job,” she said.
Doing so during the process “is a big deal” and can change the entire document due to alterations in income and stability and will result in a “totally different loan.”
Large deposits and large amounts of cash must also be accounted for, Hendricks said. That includes “mattress money” and gifts from family members often applied toward down payments toward a home.
Such sources of funding must be documented and cannot be used toward qualifying – just your actual earnings and other sources that aren’t one-time dollars.
Insufficient funds from issued checks are another no-no that Hendricks said to be aware of when going through the lending process. Records are reviewed for several months.
Credit checks remain an important tool for lenders when analyzing potential deals. Not having disputing accounts on a review 12-24 months in the past can go a long way toward approval, she said, especially in current economic times.
“It’s a huge deal right now,” she said.
Hendricks said credit scores within 640-680 are average, 680-700 are great and 700-plus is excellent.
Anything below average can be cause for concern from the lending side, but Hendricks said many in the industry will try to work with clients on a solution. That can include credit counseling management.
Technology has changed the profession, Hendricks said, as computers now keep any and all information pertaining to finances that can weigh positively or negatively on a person’s attempt to secure a loan – including bankruptcies and credit issues.
“They used to not be on each item,” Hendricks said, referring to paper documents once prevalent in the industry. “They are now (with computers).”
The industry is also constantly evolving, Hendricks said, and updated federal guidelines that dictate parts of the process can occur once or twice a week. That means delays in reviews and the need for lenders to stay on top of education.
Those delays can be frustrating for prospective home owners, Realtors and builders. But, Hendricks said, with the right levels of communication, frustration can be held to a minimum.
“We need them on our team,” Hendricks said of Realtors and others in the industry. “The biggest thing is to keep the lines of communication open.”