The Golden Rules of Mortgage Lending – The Five Mortgage Rules In Lending

Most Americans can not have a home without mortgage loans. Well, another option is to inherit a home. We, as a community, buy everything in loans. Lenders change their attitude towards borrowers according to different factors. If the economy is rising, lenders seek borrowers. When the economy shrinks, borrowers find it increasingly difficult to get a mortgage loan. However, you can find a mortgage loan regardless of economic conditions.

5 Important rules should be considered when advisors and clients are helped to quickly understand how the mortgage works. The reasoning is quite simple, if the customer has a basic indicator of how finances work, then it is much easier to deal with it. If the consultant educates the client, he will be more successful as an operator, gain many more referrals and be seen more competent than others.

Security

Serviceability

Structure

Statements

Story

What are these about and how do we apply them in the world of finance?

Attention to detail is paramount! Each rule will always cross reference to the next S rule. The 5 S’s are always interrelated.

Security

A good broker should be based on security. In that sense, it means that we help you lend against property as a primary security. Is the customer buying real estate security? Are you refinancing real estate? Is the transaction a combination of refinancing and buying?

Serviceability

Also known as “The Law of Affordability”.

Can the customer pay the debt? This will include general exposure to customer debt. In general, a serviceability analysis will be performed in the customer accessibility position: the common-sense rule. This is to ensure that the customer can pay the debt (s).

Remember, different lenders do this differently, so that the accessibility position of a customer may vary between different lenders. It should be in tune with the different requirements of the lender.

Structure

Keep in mind that different lenders make their assessments differently. They see the structure differently. The loan structure of your clients is extremely important. This may involve identifying the difference between an encrypted loan and an unencoded loan (owner-occupied or investment), since different laws may govern different loans. This may also involve knowing how different products are valued with different lenders. This can also involve the way the loan is viewed in terms of service capacity. So, as an example, an investment loan has a debt capacity greater than a mortgage loan, since some lenders take into consideration the negative adjustment when evaluating the loan, since the loan can / can be deductible. The lender also takes into account the rent, if applicable. Rent is an income.
Statements

The documentation required to allow a loan to be processed. Make sure you have compiled all the necessary documents to be able to judge that the loan application is ready to be processed. Your application for funding is a statement. The income documents you provide are statements. The ID you provide to the customer are statements. The loan statements that are provided to refinance are statements. There are many aspects to the five S statements aspect. You should be able to decipher what is needed the moment you deal with the customer.

Story

Remember to explain the whole transaction.

This is the sale and / or explanation of the deal. This is your opportunity to sell the customer to the lender. Remember, the lender either does not know your client or has a personal relationship with him. Stay alert to the facts. Learn everything you can about the client about yourself and your situation. Translate this information into relevant facts related to the application. As much as possible, be detailed, but avoid using emotional language.

As a broker, if you can interrelate these 5 five rules, you will be successful.

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