What are you waiting for? Just get started Qualifying for Loan
Hi everybody, thanks for tuning in to the Home Brokerage, it's a new monthly series we're gonna be doing on where the home brokerage interviews the experts.
John King: Expert!
Jon Sump: This is our first expert here, John King. He is the ... as you know I like to work with people in the area that are the best at what they do, and so they provide the best service to my clients by doing so. So, John king is a mortgage lender,
John King: Yep.
Jon Sump: At summit funding here in Loti.
John King: Correct.
Jon Sump: And, one of the reasons I have john on here is because I talk to a lot of people throughout the days, and a lot of people think they're not ready to buy or they don't know if they qualify. They're too scared to get the process started, and I wanted to do something which is why I named this "There is nothing to be Afraid Of". It's just a simplest talk to me and John to find out where you're at, and how to get the process started and to get you moving forward. Right?
John King: Yeah, exactly correct.
Jon Sump: So a couple of questions I hear a lot I wrote down and I'll be asking John so you guys can actually get an answer directly from him via this video. Okay,
John King: Sounds great thanks Jon, let's go.
Jon Sump: So, people have a lot, few questions regarding credit.
John King: Yeah.
Jon Sump: Number 1, they look at these things that are like Credit Karma, things like that and they think they can't do something, or they think they're overqualified, or what the case may be. What is your opinion and how does that work compared to what reality is?
John King: That's a great question Jon. First of all, the challenge is where do you get good information? Credit Karmah's done a phenomenal job in giving you good data about the items on your credit reports. You can actually get free copies of your credit report by going to freeanualcreditreport.com, but that done not give you your credit score. The biggest issue Jon, is that there is multiple credit scoring models, so when somebody tells you your credit score is blank, that might be your Fico score, that might be your Vantage score, that might be your score plus. There is couple of other models, and so it's kind of like grading in grade school nowadays. If you have school age kids
Jon Sump: Right.
John King: We used to get an A or an F, right?
Jon Sump: Right.
John King: Now it's a T or a P or I don't know what school district that each kid's in.
Jon Sump: Or numbers.
John King: It's something totally different.
Jon Sump: Yeah.
John King: And so, it's a similar concept. When you go on to Credit Karma and you see that your credit score says you're a 700, that doesn't mean your mortgage lender's gonna get a 700. You also have an issue with what I call "filters". And so, A filter basically says car loan companies care about something different than mortgage companies care about.
Jon Sump: Right.
John King: And so, on the same day, you might have a car loan company that gives you a certain score that a mortgage company would give you a different score because of the filter gives certain priority to different data, then maybe what an unfiltered score would be.
Jon Sump: Right. And a lot of people also see the Credit Karma scores and other scores out there and they think that, that's, you know, written in stone with other credit is. I know from first hand in working with you, that you've pulled my credit score and was actually, in my case, higher than what Credit Karma said.
John King: Exactly
Jon Sump: And it works differently for everybody.
John King: Yeah, there's no model, you know, I'm sure that you've heard this from Jon before, and you haven't you'll hear it sometime down the road.I look at these credit systems online, kind of like what realtors look at Zillow, and what the house price is on Zillow. The truth is it's just a number. It really isn't, you know, everybody says "Gosh, how much higher is Zillow compared to real life or lower?" Or "How much higher is my Credit Karma score compared to my real score or lower?" It's not a certain amount higher or lower, it's a different model. For you it might be higher, for someone else it might be lower.
Jon Sump: Right.
John King: You just have to get the right answer from the right person, and I'd like to be that right person for your buyer.
Jon Sump: Exactly, perfect. So, another question, what do you see is, do you have, like, what is your average scores you've seen let's see, in the last year. I mean for new people coming in to get qualified.
John King: I'm gonna answer it a little bit different.
Jon Sump: Okay.
John King: I'll answer the question directly by saying the average credit score in America right now is about a 680. So half the people are above that, half the people are below that. But, the reality is, it depends on what you're looking for.
Jon Sump: Mm-hmm (affirmative)
John King: If you have a low credit score, but you have some other compensating factors, you've got a long time on the job. You've got a decent down payment, decent might only be 5 percent, so I'm not talking about a lot of money.
Jon Sump: Right, exactly.
John King: I can do loans down to a 550 credit score. Takes so compensating factors, some other things that look really good, but I've had people who have come to me and said "John, I have a really low credit score" and I pull their score and they're right.
Jon Sump: Yeah, well you know, I've had people ask me a lot of them say to me, I should say, that their way to get their credit score up to 800 so they can buy a home.
John King: That is totally unnecessary Jon.
Jon Sump: Yeah, exactly.
John King: The fact is, is that I tell people that "If you've got a 640 or better credit score, you can pretty much get anything you want." You'll get a little better if you have a little higher score, but it's an incremental difference, it's not gonna make a huge difference. But, I wanna add one more thing, there are ways to significantly improve your credit score. One of the biggest ones is something called "Utilization". Can I take a quick minute to explain that?
Jon Sump: Absolutely.
John King: Utilization is how much you owe on your credit card compared to the credit limit. So if you have a 300 dollar credit card and you owe 200 dollars, you have 66 percent utilized. The ideal number is 10 to 25 percent per credit card. So, I have a lot of people come I'm and have horrible credit scores because they're over utilized. But, when they pay them down a month from now, I've seen people's score jump by a hundred points sometimes, depending upon if that's their only issue
Jon Sump: Right.
John King: So just 'cause you don't have great credit, doesn't mean there aren't ways to fix it quickly and inexpensive.
Jon Sump: Exactly. So, another question I have for is that a lot of people seemed to think they need to save 20 to 30 percent to put down.
John King: Yeah. That is a myth that has been around for a long time. The fact is, is that, we have programs that can be zero down. Now, I wanna qualify that. Zero down, you still have some closing costs, you've gotta pay for an appraisal, you've gotta pay for the earnest money deposit. The upfront money to the cellar. And so the least out of pocket I've gotten somebody into a home is 1,500 - 2,000. Those loans are a little more expensive, you're gonna pay a little higher rate] ...
Jon Sump: But real quick I wanna say something here. That's 1,500 to 2,000 dollars to get into a home. We're closing on one today.
John King: Yes. Absolutely.
Jon Sump: Same scenario. Actually she's in the 1,500 range.
John King: She's in the 1,500 range. It is absolutely doable. You are certainly gonna see some better terms if you put more down.
Jon Sump: Sure.
John King: So, you are okay to save that money or use that money if you have it. I'll advise you on whether it's a good idea or not, but it is much better to talk to me about your options even if you haven't saved up the money because there are ways to become a homeowner, instead of waiting and having house prices go up. Have the interest rates go up, and you pay a whole lot more once you've saved that money for down payment.
Jon Sump: Correct. And there is problems out there that we've heard of and utilize a lot of. Down payment systems, programs, people can get gifts from family members.
John King: Absolutely.
Jon Sump: There is a whole lot to ... that 1,500 dollars doesn't even have to be yours.
John King: That is exactly correct.
Jon Sump: Your parents can give it to you for Christmas.
John King: It's right around the corner right now!
Jon Sump: Exactly.
John King: Absolutely,
Jon Sump: So, we've already covered the cost of appraisal inspection, home inspections, roof inspections, all the things are out of pocket, but that's including that 1,500 to 2,000 dollars.
John King: Yep.
Jon Sump: So what about job history?
John King: You know, job history, really what we are looking for is, are you employable? And do you have good prospects for future income? If someone has been out of the workforce and hasn't worked for, you know, 10 years. Then I gotta look back and say "Well, what does their work history look before that?" Typically, if you haven't worked for at least 6 months, if you've had a job gap of 6 months, then I have to show that you're back on the job for 6 months., but, that's it. So if you've moved from one job to another as long as you're improving your employment prospects, as long as you're saying "Hey, I switched from one job to another because I'm getting better benefits, better pay per hour, I'm closer to home." That all makes sense. We don't need you to be on the same job, we just have to be careful if you switch to a variable type of commission or income. Such as commission, such as bonuses, or being self-employed. That changes the work history view.
Jon Sump: And what about where people used to say you had to be the exact same kind of job.
John King: Nope, you don't. As long as we can see a consistent pattern of improving yourself you can change from one job to another in under most circumstances, we don't have a problem with that. We're just looking for, are you reliably employable. That's really what we're looking for.
Jon Sump: Another question. I have talked to some folks that were retired, and thought that because they're retired they cannot buy a new home or get a new loan to buy a new home.
John King: Yeah, I got some that actually ... I thought it was a joke the first time I heard it, but they said "You know, will you let me get a 30 year loan, because I'm not sure I'm gonna be alive that long." You know, that's not something that were really concerned about.
Jon Sump: Right.
John King: The fact is, is that, you know, we have opportunities to help people with traditional mortgages, and I actually do something called a reverse mortgage for the right client that actually is sometimes a great product as well, to assist retired people with decreasing their cost of home ownership.
Jon Sump: Wonderful, so therefore that covers the age thing.
John King: That covers the age thing! You have to be 18, beyond that, no age limit.
Jon Sump: So now, what if they don't qualify right now? Is that such a horrible thing?
John King: No, you know and that's the key Jon. I've never said to somebody, "No you can never buy a home, ever, don't bother!" I don't ever say that. The fact is, is that it's just not today. Okay? There's really only 3 things I care about when look at qualifying somebody to buy a home. And that is what I call cash, credit and income. So, how much money do you have right now for down payment and saving in the bank? How's your credit? And how's you income as far as your ability to pay in the future? Well, if we have one of those things is not great, but the other two are strong, I can probably help you out today.
Jon Sump: Exactly.
John King: If 2 of them aren't great, but one's strong I might be able to help you out today. And if none of them are great, then were gonna have to fix some, Okay? But I'll give you a plan and outline for you what has to happen to fix those things, and it'll be the right plan. Instead of searching online and hoping you have the right answer, it's a custom plan guys. The key to me, when I talk to people about advice for fixing your credit or qualifying for mortgage is very much like what your doctor tells you when he prescribes you medicine. If you got medicine for a particular ailment. And your friend calls you and says, "Hey I have that same ailment, can I borrow some of your pills?" What do you think? Good idea?
Jon Sump: Not a good idea.
John King: Not so much, because that pill will kill them, because it's about their medical history compared to yours. The same thing has to do with credit advice. How to improve your credit score versus somebody else' credit score. The things that I tell one person to do to improve their credit, will kill somebody else' credit. So, don't take other people's medicine. Do not take advice on what your friend did to qualify for a mortgage you need to get the advice that applies to you.
Jon Sump: And you know, here's the thing. He's helped several people over the years, literally, go from not being able to qualify, that I've helped personally buy a home, get the plan in place with them. And then after 6 months to 8 months to a year in some cases, they're ready to buy and we get them into the home. But it starts with knowing where you're at, not thinking you know where you're at.
John King: You end up missing something and you end up working on the most important thing you were told about, and you don't realize that one of the other 3 legs I was referring to, you got challenges in that area, and you didn't even address them.
Jon Sump: Right, exactly. So bottom line is, you'll just set up an appointment with John, he'll sit down with you, go over exactly where you're at because you may be qualified to buy a home right now. So, how can they get a hold of you?
John King: You can call us, so you can call my office, I have a team standing by, so, I have a great, wonderful, group of people that help me to serve all of your clients Jon. You can reach our office, it's 209-910-4019 and speak to anybody at my office they'll be able to set you up with an appointment with me, they'll collect your information so that we can have a preview of your credit, tell you what paperwork we need you to bring in. Really get everything set so that we can either meet in person or talk on the phone and create a customized plan that works best for you. So 209-910-4019 or email us at email@example.com
Jon Sump: Perfect, well thanks again for watching, we really hope this has been helpful, and we'll see you on the next one. If you like this, please like it and share it, you never know, one of your friends might be ready to buy a house right now. Thanks and make it a great day.
John King: Thank you.