If you’ve ever applied for a mortgage loan, then you’ve been told how important it is to put your best foot forward when you’re being considered for a sizable loan. It’s never OK to lie on a loan application. Lying to an underwriter is mortgage fraud and it’s one of the fastest growing crimes in the financial world. However, you should be selective and careful about the way you present yourself to the person or company deciding whether or not you’re worth the risk of lending to.
Put yourself in the position of a lender and you can see why it’s important to avoid certain words as a loan applicant. A loan from the perspective of a lender is an investment and their return on that investment is dependent on your ability to repay the loan. As a result, you need to make yourself look like an attractive investment. Here are some words to avoid when a lender is considering investing in you.
Entrepreneur: Think of the “entrepreneurs” you know. Most of them are probably people who you think of as a little bit scattered, jumping from one idea to another hoping to stumble into something that works. A lender craves stability in a borrower and entrepreneurs are some of the least stable borrowers out there. Most entrepreneurs have an income that varies greatly from month to month and they have a hard time showing a consistent track record of steady income. Instead of the word “entrepreneur,” consider calling yourself a “small business owner.” Again, whatever you call yourself, it needs to be an accurate and factual description.
Unemployed: In an economy like this where layoffs have become a common occurrence, lenders are paying particular attention to the stability of an applicant’s job. Certain industries have seen greater job losses than others and lenders will be looking for assurances that your job is safe. No one knows what their future holds and all you can show on paper is a work and income history, but as much as possible you need to project confidence in your ability to maintain or grow your income in the future.
Desperate: Getting a loan a few years ago was a piece of cake and many were funding several days early because it was such a slam dunk. Today, getting a loan takes more time and often it comes down to the wire in meeting a deadline. If you try to rush the process or ask the lender to accelerate things, it can easily become a red flag that kills a deal rather than accelerating it. In spite of your actual state of desperation, a calm, rational, patient demeanor will get you a lot further with a lender.
Flip: The real estate market has changed dramatically in the last few years and the idea of an investment property has also changed. This could be the best time in a decade to invest in real estate, but a lender who is aware of your intention to “flip” a property is going to be much more hesitant to extend financing than they used to be. It’s ok to call a property an “investment” but you may want to keep your plans to flip the property to yourself when dealing with a potential lender.
Similar Posts:
- How to protect your investments
- Help for Underwater Mortgage Loans
- 4 Alarming Foreclosure Facts
- Has there ever been a better time to refinance?
- Home appraisal tips, process, cost
Posted December 3, 2009 by Admin under Financial News