We’re always on the lookout for talented loan officers to join the City Lending family. But why might you want to come aboard? One look at City Lending’s diverse suite of loan products says it all, with financing options to meet the unique needs of every kind of borrower imaginable. Let’s look at a few of City Lending’s offerings.
Purchase Products for a Multitude of Borrowers
Bank Statement Loans for Non-Traditional Earners
An emerging trend even before COVID-19 shifted the world into a more online direction, gig workers and other self-employed folks are a rising demographic you should be targeting. These non-traditional earners often don’t have the pay stubs, tax returns, and work histories that conventional loans generally require for approval. But these would-be borrowers are creditworthy and can benefit from Bank Statement Loans that gauge earnings by looking at bank account deposits.
VA Loans Are Available for Millions
While veterans and active-duty members of the military don’t have to get VA loans when seeking a mortgage, they would be wise to consider one. Thanks to backing by the U.S. Department of Veterans Affairs, VA Loans have highly attractive features, such as up to 100% financing of the value of a home, with no maximum loan limit. Plus, there’s no mortgage insurance required and borrowers with credit scores as low as 600 can often qualify.
How many of these potential borrowers are out there? According to the most-recent V.A. data, there are about 19 million veterans in the United States today. Add that to the 1.3 million active-duty members of the armed services and you’ve got north of 20 million people who might benefit from a VA Loan.
Real Estate Investors Spend Billions
Often when we think of people who are applying for mortgage loans, the mind conjures up an individual, couple, or family looking for a single-family home. And they are common borrowers. But loan officers know that these folks make up only a part of the lending landscape; property investors compose a huge portion of homebuyers in today’s market. In the third quarter of 2021, about 18% of all home sales went to real estate investors, who collectively spent around $64 billion. If nearly one in five homebuyers is a property investor, that’s a group you can’t overlook.
So which loan products best serve these investors? City Lending’s Investor Cash Flow Program is tailored to the needs of real estate investors. With no requirement of personal income verification and loan amounts up to $1 million, Cash Flow loans look at the potential income that a property will generate in evaluating qualification. And not just for purchases — this program can also be used to refinance investment properties.
FHA Loans for First-Time Homebuyers
While first-time homebuyers don’t necessarily need to get FHA mortgages, it is a popular option for many. People who are buying their first home often have less money for a down payment, and FHA guidelines allow for as little as 3.5% down. Given that first-time homebuyers tend to be younger than those who have owned homes before, their credit histories are often shorter, and perhaps with a few issues, making the moderate credit score requirements for FHA loans a good potential fit.
And the pool of first-time homebuyers is a group you certainly would not want to ignore. While the percentage of people who are buying homes for the first time fluctuates from year to year — falling from 33% in 2021 to 27% in January 2022 — the number of first timers who might be right for FHA loans is comfortably in the millions.
ITIN for Foreign-Born Borrowers
A considerable number of people who are allowed to work in the United States lack social security numbers or the documentation needed to qualify for conventional loans. This represents many would be home buyers who fall into this segment of the market.
Many of these people may benefit from City Lending’s ITIN Number Loan Product. Even if a potential borrower is undocumented, or doesn’t have a valid residence permit, they may still be able to qualify for a mortgage loan. They just need two years of tax returns, and two months of bank statements among the requirements, and they can own a piece of the American dream even if they aren’t American citizens.
Refinancing to Fit the Needs of Many
RefiNow offers an excellent way for low-income homeowners to refinance and take advantage of today’s attractive interest rates to save money each month. How much money? At least $50 a month, though that number is often higher. RefiNow is perfect for those who may not qualify for a conventional loan, as this refinance program has more-relaxed application requirements, a debt-to-income ratio of up to 65%, and credit score requirements as low as 620.
Do you know a borrower with a fixer-upper in need of serious work? Or maybe one who just wants a simple renovation, such as a bathroom makeover or an upgraded kitchen. Then they’re ripe for an FHA 203k Rehabilitation Loan Product, versatile loans backed by the Federal Housing Administration that allow borrowers to make home improvements on either a new home or one that they already own.
You’re unlikely to find a borrower who doesn’t like getting cash that they can use for anything they want. From paying off a credit card to buying a new car, covering tuition costs, and more, FHA Cash-out refinancing can be an ideal way to use one’s home equity to put cash in their pocket. How does it work? The borrower simply replaces the mortgage they currently have with another mortgage, quite possibly at a lower rate given today’s interest rates.
Your credit score plays a big role in your mortgage eligibility. And understanding this is often the key to getting your dream home. Here’s what a credit score is and why it matters when you’re looking to buy a house.
First, what is good credit? From the perspective of your lender, good credit means a history of using the credit you’ve been given in the past with care and paying back previous loans according to their terms. With these positive credit behavior patterns, you are more likely to get approved for a mortgage at a low interest rate with favorable terms.
Credit Reports and Credit Scores Are Not the Same Thing
A credit score is a number that’s assigned to you as an estimation of your worthiness to get credit. A credit report is a detailed look at your credit history. Let’s drill down a bit on each.
- Your credit report shows how much money you have borrowed, how you’ve paid it back, and how much credit that you have available to you. The report includes debts such as student loans, auto loans, and credit cards, among others. Credit reports also show any red flags, such as referrals to collection agencies, long-overdue bills, bankruptcies, and tax liens. You have a right to receive your credit report; federal law requires each of the nation’s big three credit reporting companies to give you a free copy of yours. You should check out your credit report before applying for a mortgage.
- Your credit score is a number between 300 and 850, determined by a number of factors related to how you’ve managed credit in the past, including the type of credit that’s been extended to you and for how long. The most commonly used credit score is the FICO score, created by a data analytics company previously named the Fair Isaac Corporation, now simply FICO.
Factors That Determine Credit Scores
- Payment history is a big factor in determining a credit score. About one-third of the calculation that sets your credit score relies on how you’ve made payments on your bills. Consistent on-time bill paying gets you good marks, late and partial payments will result in negative marks.
- Balance ratios rank a close second. Known in the finance world as a credit utilization ratio, this split between the debts you owe and the amount of credit you have available is hugely important in determining your credit score. Keeping this number under 30% has a positive impact.
- Credit timelines come in third. Got an old credit account you rarely use? Don’t close it! The longer you’ve had a credit account, the better this longevity contributes to your credit score. Conversely, closing longtime accounts could lower your score.
- Your credit mix is also considered. Lenders like to see diversity with credit, giving credence to the fact that you can handle a variety of credit situations. Open credit, revolving credit, installment credit — it all comes together to paint a good credit picture.
- Recent credit activity plays a part. The flip-side of credit longevity, a flurry of recent credit activity doesn’t bode well for a credit score. While not as significant a factor as payment history or balances owed, applying for multiple credit accounts over a short, recent period can put a dent in your credit score.
What credit score do I need to get a mortgage?
This is often the biggest question people ask before they apply for a mortgage loan and the one that weighs the heaviest in their minds as they await approval. While this varies from lender to lender and other factors may influence the results, a credit score of 620 is generally considered the floor for getting approved for a conventional mortgage. A score of 740 or higher is often considered the range to get the best possible terms and best interest rate on a conventional mortgage.
Can you still get a mortgage if your credit score is in the 500s? Yes. Though if your credit score falls below 620, your best bet is usually to apply for an FHA Loan mortgage, as government-backed loans often have lower credit-score thresholds — with higher down payment requirements based on your credit score. If you have a score of 580 or higher, you may be able to get an FHA loan with only 3.5% down. With a score in the 500 to 579 range, you’re probably looking at a 10% down payment to secure an FHA mortgage.
Specifically designed for veterans and active-duty members of the military, VA Loans are similar to FHA Loans in that they are guaranteed by the government, backed by the Department of Veterans Affairs. The credit-score requirements tend to skew slightly higher for VA Loans over FHA Loans; 600 to 640 is a common range for getting approved for a VA Loan, which often has the advantages of 100% financing with no down payment and no requirement for mortgage insurance.
How can I improve my credit score?
While there is no quick fix, there are steps you can take to improve your credit score. If you have long-standing debts, such as student loans, paying them down will help. All the better if you can close out the debt. But don’t close out paid-up credit cards; best to keep these open as longer-term lines of credit positively affect credit scores. If you can’t completely pay down a credit card, making more than the minimum monthly payments will help.
What if my credit score is still too low to get a mortgage?
Whether it’s due to no credit or bad credit, this is an issue many would-be borrowers face. For many, having a co-signer who does have a good credit score is the answer. Another option is to have another person, a family member or a significant other, buy the home and put your name on the title. When your credit score improves, you can then apply to refinance to have the mortgage in your name.
A good credit score can change your life, handing you the keys to the home you desire. And when you’re ready to embrace that change, lenders at City Lending are ready to serve.