It’s been six years since the stock market crash of 2008. Since then the economy in the U.S. slowly has been improving. Jobs are coming back. Locally, Encinitas real estate prices are on the rise. So why is it still hard to get a Encinitas home loan? In an attempt to prevent what happened leading up to the financial crisis in 2008, new regulations and policies were put into place regarding financing to purchase property and homes. Lenders today want more than your W-2’s and a tax return. You may be asked to provide voluminous amounts of financial information to get a loan. This is especially so if you are self-employed or own a business. Securing all of this information can drag out the Encinitas home loan process and cause people who, ten years ago, would have been able to obtain financing without a problem, to be declined for a home loan.
What you can do when you run into financing problems:
First, to increase the chance you will be provided a Encinitas real estate loan from a lending institution, get your paperwork in order. Ask in advance of the loan application process what documentation your lending institution will need to process a loan application and provide financing. Gather all of that information before you apply for a loan and it will make the process much quicker. You might also learn in this process that you may have to wait a while before you will qualify for traditional financing. If you haven’t been at your job for very long or if you just started a business, you may need to wait one or more years before you will qualify.Pay as much in cash as possible. If you make as big of a down payment as possible, you won’t need to borrow as much. That way you won’t have to meet the requirements necessary to borrow more money.Get creative about how you go about financing. If you have chosen a home you want to purchase, offer to pay for the Encinitas home through seller financing. If the seller doesn’t need all of the cash up front for the purchase of the home, you can pay them for the house on time. Generally, seller financing is beneficial to both parties to such a transaction. The seller receives interest payments from the buyer on the sale of the home, which are usually higher than they could receive if they had the asset in a savings, money market, mutual funds, or other investment account. It is beneficial for the buyers because they don’t have to meet the strict requirements of lending institutions in order to finance the purchase of a home.In this same vein, as a buyer, you could also borrow part or the entire purchase price from a friend or family member. The person or people you borrow from will make more money in interest than they would if that money was in a traditional savings or investment account, usually upwards of 5%.
Another alternative is to have someone else with a very good credit history and financial backing, co-sign for the loan. Typically, this would be a parent or other close family member who trusts that you will make the installment payments to the lender in a timely manner. When someone co-signs for a loan, they are making themselves 100% liable for repayment of the money. That’s a big request to make of someone, but if they want to see you get into a home and start moving forward, they may be willing to help you out.
~ Cherie Young ~