Is it difficult to get a loan? Fact or Fiction
We hear daily on media channels this statement: “Consumer credit is limited, mortgage money has dried up and student loans are more difficult to find”. A small percentage of borrowers have been impacted by these tightening restrictions. My example of the person who has been impacted negatively is: Joe the Pizza Parlor owner. Joe has a good business, lives in a nice house and has a good credit score. Joe’s problem is that he shows on his tax returns zero income. He writes everything off. His accountant has been doing this for a number of years. As a result, Joe looks like he makes no money each year. We all know Joe makes good money, he pays his bills, drives nice cars, takes vacations. When he applies for a loan to buy a home the lender needs to see his tax returns and they show no income. In today’s lending world banks want to see two critical things: number one, good credit and number two, income.
Joe will now have to declare income on his tax returns if he will be looking to acquire credit for homes, cars ect…. Accountants will be advising Joe to show income. As a result, the federal government will collect more taxes and help pay down the deficit.
The “Joe’s” are having a hard time getting loans. Fact!
Everyone else having a hard time getting loans. Fiction!
Good information, especially in a time when we could use some clarification on the financial situation we are in!
Agreed 100%. The same could be said for Joe Realtor for that matter, or any self employeed person. The fact the media is making it seem like its hard for everyone else to get a loan is slowing down the market since people figure they can’t get approved so they don’t even try.
I agree. I have had no problem with settlements getting funded or decent buyers getting mortgages. I really wish the media would stop! They have the ability to make this economy a recession or bounce back quickly. I feel they are very powerful and should use it to the advantage of this country getting back on its feet, rather then the reverse.
I was getting my car serviced…lots of Honda Loans going on at the dealership. We just leased a copy machine…no problem. Closed several transaction this week…everyone got a loan. What a spoof. This is WHY MainStreamMedia is the biggest problem we face. The news is now double speak and it’s effecting everyone.
I totally agree with everyone. Only the non-qualified can’t get loans.
Just wondering – doesn’t Joe’s zero income tax return mean he doesn’t pay taxes? You can’t have it both ways . . .
Christian:
By reading comments made by Jim, Lori, Janet and Mark, I’m convinced about your blog’s ability to draw an audience of TRUE real estate/financing professionals. I ditto their comments.
Let me add two other thoughts!
1. There are several in the media and in our profession that are unaware of current 100% financing loan products. Yes Readers! You can get 100% financing under certain conditions.
2. If you have credit, income AND LIQUIDITY, you will be able to get a mortgage.
Attention First Time Home Buyers! Don’t let unlicensed media impact your decision.
There’s a saying……..BUY LOW……..SELL HIGH! Hire experienced real estate professionals!
Let these professionals consult you on how to make a good purchase!
Don’t wait to buy at a lower price. You might miss the boat. If you are able, ready and willing, do it! Purchase a home…………not a house that you view as a stock purchase!
Great Post Christian!
Christian,
I enjoyed your post. You hit the nail on the head. I don’t even watch the news anymore… I watch television for entertainment purposes only… because the nay-sayers drive me crazy. If there was a news station that posted positive pieces, I would watch every day. It’s not that I don’t want to know if something bad is about to or has happened… it’s just that even mild things are blown out of proportion to reality – anything to make the situation worse. My news should not be DRAMA based television – TNT does that. My news should be positive and balanced…not aimed to drive PANIC into the nation that we love. I was getting a tire repaired just yesterday and the news was on — they were showing how much the presidential candidates spend on their clothing… shoes… hairstyles… NOW… just why is that relevant? Do we want our next president to be dressed in blue jeans and a concert tee shirt and tennis shoes (not that there is anything wrong with casual wear) but how serious would that person be taken? For that matter: do we want our pastor driving a jalopy and not presented to the nines? What in the world is wrong with the public that we can allow ourselves to be “brain-washed” by the media and allow the media to make us judgemental? Just because it is on television… does not mean that it is true. It is basically someone’s opinion… not news.
Thanks for listening…
Melissa
Christian:
As an addendum to my earlier comments, I agree with Sandy Fenton. When you try to achieve one goal, you can impact yourself negatively in other areas. If you don’t report income, you don’t have one of the key ingredients to purchasing a home.
NO MATTER THE MARKET! NO INCOME! NO LOAN!………..Unless you are applying for a STATED LOAN!
If you are not accurately stating your income, you could be committing a crime.
As my niece would say……………It’s not nice to sneak!
It is very easy for qualified buyers to get loans in todays market…part of the problem now is that so many folks were NOT qualified these last few years, which is why we are in the mess we are in now. Ultimately, of course, the responsibility lies with the corporations that were greedy enough to allow these stated income loans to happen
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