HOW TO GET APPROVED FOR A HOME LOAN (How to Get a House Loan)

learning how to qualify for a home loan can be super stressful that's why in this video I'm gonna show you how to qualify for a loan how to get pre-approved and how to go through the entire process without getting taken advantage of or hurting your credit [Music] what's going on guys this is Chandler Smith and over the last five years I've taken out ten different loans and I can tell you the first one that I did was absolutely terrifying because I had no idea what went into the process and I didn't know what I needed to do to make sure that I got approved for that loan so in this video I'm gonna go through every single step of the mortgage process and I'm gonna show you exactly what you need to do to get pre-approved for a loan so that you can get into that first home for property so if you haven't already like the video subscribe to the channel and let's jump into it so you know what you need to do to get into that first property now with every bank there are four things they're gonna look into first off they're gonna check out your credit score next they're gonna look at your job history or your income then they're gonna look at your debt to income ratio and finally they're gonna look into your bank account to make sure you've got enough money for the down payment so I'm gonna go through each one of these four to show you exactly what you need to get approved for a loan now the first part of this is your credit score and I know anytime someone hears credit score they get a little nervous alright your credit score can be a terrifying thing if you don't know what you're doing but the reality is that it's not that complicated if you understand how it works and to get approved for a loan you only need a 580 credit score and so it's not that hard to get to that point now a 620 it's a lot easier to get approved and there are different benchmarks along the way where the higher your credit score is the higher the likelihood of you getting approved for a loan and the lower your interest rates will be but if you're just trying to get into a property you only need that 580 credit score there are five different things that banks look at and each one of these things is weighted differently I'm going to break down every one of the five things and I'm going to show you how important each one of them is to you getting your credit score out the first aspect that banks look at is your payment history and this is actually worth 35 percent of your credit scores so it's huge it's the biggest one and all that it is is making sure that you're paying your bills on time now if you don't have any credit then you're not going to be able to prove that you're paying on time this is why it's so essential that you have at least three lines of credit so if you don't already go and get three credit cards or a couple credit cards and a loan on your car now I'm sure a lot of you are saying Janet bad I ate honey okay look credit is what makes the world go around and I'm not telling you to blow all your credit and let it build up to where you have a ton of debt don't do that pay off your bills every single month and prove that you can have credit and pay it off consistently because that's worth thirty five percent of your credit score the next aspect that they look at is the amount of credit that you already have and this is actually worth thirty percent of your credit score so you need to get at least three lines of credit so you can start building credit but in those lines make sure that you're always paying them off every month and that you never use more than 10% so if you've got a three thousand dollar line of credit in your credit card don't use more than three hundred dollars every month now there's another bench market 30% where you can still gain points if you're staying under 30% but you're going to be able to build your credit a lot faster you're staying under 10% and I don't mean leave 10% in there every month all right go up to 10% and pay it off at the end of the month if you do this you're gonna be blown away how fast your credit score goes up on top of that don't get garbage credit so many people are going to get their Best Buy card and there may see card and everywhere else don't apply for those cards all right those are crap cards and they don't get you nearly the amount of points so you need to get tier 1 cards now these are cards from the tier 1 banks so Wells Fargo Bank of America chase any of these bigger banks that's where you want to apply for your credit cards because credit looks at those better than it does a garbage carts the next aspect that they will look at is the length of your credit history and this is actually worth 15% of your credit score so the way that you build this up is by taking out credit and showing that you can consistently make payments that's why it's so important for you to get three credit cards and for you to get a car loan and to make those payments because every six months you're gonna get additional points to your credit score because you've been able to prove that you can make payments for an extended period of time so don't go take out a car loan and pay it off a month later that won't do you any good you need to have consistent payment history for those six months and those year long and those two to three year long periods to build up this aspect of your credit now the next aspect is the amount of new credit and this is only worth 10% of your score but I've seen a lot of people go and totally mess up their score because they don't understand this aspect so they hear that they need to get credit so they can get a loan on their home so they go and get three credit cards and they take out a loan on their car and then they're applying for a mortgage on their house and they get denied because they've totally jacked up their credit score by going and getting a ton of new crédit new credit is bad on your score now it's a catch-22 because you need new credit to build up longevity a long credit so you're gonna have to take some of those dips in your credit but if you're trying to apply for a mortgage tomorrow don't get any new credit and when you're shopping out different lenders whether you're going to credit unions or banks make sure that you shop them out and you don't let them pull your credit what you need to do is ask them all the right questions find the ones that you think you have the greatest likelihood of getting approved for a loan by looking at all of the other aspects that we're gonna talk about today and once you find the lender that knows their stuff and that knows you'll get approved with all the other things they've looked at as long as your credit score is half-decent then have them be the ones that pull your credit because every time you get it pulled that's affecting your credit score so if you're shopping out 10 different lenders and they all check your credit then you could have gotten approved by one of them but if he's the last one that pulls it and your credit has jumped down 10 20 50 points because all the new credit you've been looking for then you're not going to get approved so shock them out first and then once you're comfortable with one have them be the one to pull your credit finally the last aspect of your credit score is your credit mix and this is only worth 10% of your credit score and again if you don't have a good mix and you're trying to get a loan on a house go get the loan on the house don't try and get your mix beforehand but if you're thinking of getting a loan down the road or after you get this loan and you're wanting to build your credit you need to get a mix of credit and what that means is that you're getting your three credit cards you're getting a car loan and you're getting a mortgage if you have a mix of those five things you're gonna look awesome to the credit companies and everyone else as far as having a good mix and you're going to be able to capitalize on that 10% to bump up your credit score just remember even if your credit isn't perfect you're still going to be able to apply and get approved for a loan so take advantage of the tips but don't freak out talk to a great lender and I promise you they're gonna be able to help you get approved as long as you're doing everything else that we talked about right the next thing that lenders are looking at is your job history and a lot of people are saying Chandler what does that even mean well first off it means that you have a job and that you can show you've got enough income to pay your mortgage which we'll talk about later in the debt to income ratio but the biggest aspect of this is if you're a w-2 you're set because you can show you have a consistent wage that isn't going to be changing however if you're on a commission based job or a 1099 then you've got to show two full years of you getting paid a good-enough income in this commission job and sometimes that's a roadblock people run into because they might have a huge income but they only have one year under this commission job now if you're working with a good lender sometimes they can figure out a loophole to get you through but that's usually the rule of thumb that they're looking for now the next aspect that banks are looking at is your debt to income ratio and for some reason when we hear this we freak out because we think it's some crazy wild algorithm that they're looking at but it's really not that complicated so I'm going to break it down so you know exactly what to look at to see if you fall into the right debt to income ratio so you can get approved for a loan the first thing that you need to know is if you're doing an FHA loan you can have a fifty five percent debt to income ratio or less to be able to get approved and when it comes to a conventional loan you only need fifty percent or less now a lot of people think that when they look into the debt to income ratio they're looking at insurance they're looking at utilities they're looking at groceries they're not looking into this stuff they're just looking into car payments they're looking into your student loans they're looking into other house payments or they're looking into any other debt that's actually reported so to figure out your debt to income ratio let's do a quick scenario let's say that you've got $3,000 in total income in every single month we're going to say that you have a $500 car payment we're also going to say that on your student loans to calculate it you take one percent of the total so figure out your own student loans but we're going to say after you do that math that you have two hundred dollars in student loans that's going into that every month and we're going to say on your credit cards you've got a minimum payment you need to make we're gonna say that you have three hundred dollars so if you do the math on that that should put you right at a thousand dollars that means to get to your fifty percent you have five hundred dollars more to spend on your monthly payment or your mortgage payment you need to be five hundred dollars or less so if you need to change it around because you want a bigger mortgage then you need to eliminate some of this other debt or you need to increase your income but that's what you need to do to figure out right on 50% now you don't want to be dead on fifty percent if you can help it because the likelihood of you getting approved goes way up if your debt to income ratio is lower but for most banks and credit unions you can get approved if you're at that 50 percent mark or less the last aspect that they're looking at is your cash on hand and all that they want to see is that you've got enough cash to make your down payment you're closing expenses and stopped money in the banks you don't send yourself into bankruptcy so as long as you've got that you're gonna be good now you can talk to your mortgage officer to make sure that you've got enough on hand and they're gonna know where that numbers going to be but you've also got to remember the more money you have in the bank after being able to afford your down payment the better you look to lenders so make sure that if you do have the ability to keep more money in the bank do it so you can get approved for that loan and guys that's it if you've got all of those aspects you're going to get approved for a loan now the last tip that I wanted to give you and this is probably the most helpful hint out of this entire video and that is find an a balloon officer find someone who has done tons of loans and someone who is willing to get creative for you because I can tell you I've seen people that even match all these requirements but just barely but they don't get approved for a loan because they don't have a loan officer that's willing to go to bat and help them manipulate things to make sure that they get approved so do your research go meet with multiple loan officers find the guy that's promising you look if you can do X Y & Z I'm going to get you approved if you guys enjoyed the video push the like button subscribe to the channel and comment below let me know if there's anything else you want to know to help you get approved for a loan because my goal is to help you get into this first property and to help you get into multiple other properties so that you can build yourself a huge passive income thanks so much guys have a great day

Channel: Chandler David Smith

Views: 389,893

Keywords: how to get approved for a home loan, how to get a house loan, how to qualify for home loan, how to get qualified for a home loan, how to get approved for a house loan, how to get pre-approved for a house loan, get a house loan, getting a house loan, How to qualify for a home loan, best way to get a home loan, Kris Krohn, Graham Stephan, Chandler Smith, Chandler David Smith, Matt Mckeever, how to get a loan for investment property

Id: FNZAqceass4

Length: 13min 51sec (831 seconds)

Published: Fri Nov 23 2018