Do you want to get approved for a bigger home loan and more money? This can be a real challenge. And the banks surely aren’t going to tell you all of their secrets. But we will.
I’m going to share here a step by step of the full mortgage process.
And to give you 3 secret ways to get approved for a higher loan amount. And to share with you the number one secret that I learned as a VP at a major bank on how to get approved for a higher loan amount.
The mortgage process to approved for a bigger home loan
The mortgage loan process can be very daunting for most people.
They are going to check to see if you can qualify for a loan based on some very specific things.
It’s going to start with an application process. In the mortgage world, we call it completing the 10-03. This is because that is the name of the form for Fannie Mac.
And on this application, they’re going to ask you everything. What type of house, the property address, where you live now, how many years you’ve lived there, where you work. They’re going to even list out every single thing on your credit report. Because they’re going pull your credit report and then they’re going to list out every single debt with a full balance and the payment on the application.
Additionally, in a traditional mortgage process, they’re going to ask you about your assets. They’re going to want to know what accounts you have, Where those accounts are, how much is in those accounts, and even the account number. This goes for checking accounts, savings accounts, and retirement accounts.
They’re going to want to know all of the physical assets that you have. Even in some cases, they will want to know automobiles, boats, and other things like that that you may own and what the value of those assets are.
Again, this can be a very daunting process for most. So, let me tell you the exact process so you know exactly what the bank is looking for and how to answer and fill out this application. So, as many of you may know from watching my videos, Noelle used to work in mortgage banking.
The process to approved for a bigger home loan
I started as a loan officer. I moved up to a processor than an underwriter. That’s the person that we’re going to talk to a lot.
The underwriter is the person that will review all of your applications and the accompanying documents. And they are the person that will approve or deny your loan.
It is usually an automated process. But then there is a true human that will look at it as well. And when it comes to underwriting, this is very important. Like I said, I was an underwriter for many years. I even at one point have my certification to underwrite government loans. I did that for many years.
And then I escalated into management and then I became a Vice President at one of the major banks making quite a bit of money but still working in the mortgage banking department. So, I learned a lot of secrets.
One of those secret things, they use an automated process in most cases in a traditional world. They go through a system that is backed by Fannie Mae and Freddie Mac which kind of has an algorithm to see if people could qualify.
And that loan officer will input that information. And that process will automate what we call the 5 Cs of lending. Those 5 Cs being collateral, credit, capacity, conditions, and character. I’ll break that down for you in just a moment.
So, in the traditional mortgage process, they are looking for the 5 Cs to see if you qualify. And one of the other things that they are going to look for is your documentation. So, they will check your credit report and they will pull the credit report.
But they are also going to ask you for your verification. Your verification of employment, your verification of rent, the verification of your income, the verification of your assets.
They are going to verify everything that you put on the application in the traditional mortgage world. And this is the process that gets many people just overblown.
Again, it can be very overwhelming if you don’t know the process upfront or if you are dealing with someone that is not very seasoned. If you’re dealing with a new loan officer or a new processor, this process can get hard because they are not able to guide you in a way that needs to be guided.
So, you’re doing the right thing by reading this post. Keep reading.
I’m going to tell you some tricks to avoid this process altogether. Now that you have a great overview of a traditional mortgage process, let’s talk about the types of mortgage loans that exist. And what type of mortgage loan that will allow you to get even more home loan.
Types of mortgage loans
So, when I was speaking early about that very traditional process, I was talking about conventional loans. They are conventional loans backed by Fannie Mae or Freddie Mac.
You go to your bank and that is the process that most banks follow.
We call that the traditional mortgage process. You also have government loans. FHA stands for Federal Housing Authority. VA, veterans authority loans. That’s for veterans only. USDA loans. Those are for rural homes and things in that nature. Those are government-backed loans.
But you will still go to a traditional bank to usually get those loans or a mortgage broker.
Now let’s talk about some different types of loans that exist that most people don’t know anything about.
As I stated before, most people go and get a traditional mortgage.
And those are called QM loans. Which stands for Qualified Mortgage.
Meaning, they will qualify you and document all of your application items such I said, all of those verifications. There are new types of loans available though. They are called Non-QM loans.
And these types of loans used to be referred to in some cases as subprime. Now, I know. That has very, very connotations to people because that is what kind of ruined the economy in the United States during 2008-2009.
A lot of those mortgages failed and a lot of people lost their homes.
I am not telling you to borrow irresponsibly. Again, we are intelligent person and I want you to do it the right way.
However, you can start to get non-QM loans, again, non-qualified mortgage loans which will allow you to state your income or use your bank statements to verify your income.
And many of these loans exist and you can state your income and qualify for a much higher loan amount. This will allow you to get approved for a bigger home loan even if you may not be able to document or verify all of the things that a normal bank wants you to verify.
Again, with a stated loan, for example, you can state your income.
Pretty weird, right? Meaning, if you make $5,000 a month but for some reason, your tax returns do not reflect that amount so you cannot use verification of employment, you can have a VOE filled out.
They will confirm that you are employed, that you have been employed for a certain amount of time, and lend off of the amount that you stated on the application. This can be very powerful especially when combined with what I’m going to teach you next.
The secret to getting approved for a bigger home loan
And although you may be reading this post and trying to buy a traditional home with a white fence, nice in the suburbs, I’m going to tell you a secret that you should be doing so that you can start building your wealth and you don’t end up what we call house poor.
Meaning, where you have a home and your mortgage take up most of your income, most of your assets, and you don’t have a lot of equity in it. I want you to do it the smart way. I did it the wrong way, now I do it the smart way.
So, let’s talk about 2 ways you’ll do that. One of the major things that you want to start to get into as a real estate investor is multi-unit properties. Multi-unit properties are anything that is more than one unit.
For example, if you just bought a home or a condo, that’s just one unit.
However, if you bought a duplex or triplex or a quad and you moved into one of those units did you know that you could use the proposed rental income from those units to help you get qualified for a higher loan amount? Oh, yeah.
Additionally, when you have tenants that move in, that is income for you and that can help you offset the mortgage, and in many cases, I have students that have multi-units and they don’t pay any of the mortgage themselves, all of the mortgage and the real estate taxes,
and the insurance is covered by their tenants.
So, guess what that means for them. They can build their wealth quickly, they don’t have a mortgage payment for themselves. And essentially, they are building their wealth and they can duplicate this over and over without putting down much money on that mortgage loan. And last but not least, let’s talk about the real, real savvy way to do it as a real estate investor.
That is called Subject To. Subject to is where you purchase a home subject to the existing mortgage staying in place.
But let me quickly tell you how you can make a ton of money and why you should be doing this using subject to.
So, if you buy a home subject to, that means the seller’s mortgage will stay in place, however, you are the owner of the property, okay? I know this is a little weird for people to grasp but this is completely legal and completely ethical. And this is a smart way to start buying real estate.
This will allow you to skip the banks altogether. Do you read this?
So, if you don’t want to go through that whole daunting process, and yes, I laid it out and explained.
Now, you can do that or you can start thinking like a real estate investor like us and start purchasing homes subject to and never going to banks and start building your real estate portfolio today.
This way, you can get properties that have low-interest rates, you don’t have to deal with the bank.
I’m not talking about assuming their mortgage. I’m telling you to buy it subject to. And then you take over that person’s mortgage payments.
It’s the system that we call TOPS –Taking Over Payment System. And this is a system that will allow you to buy homes without dealing with banks, get those properties in your name.
Again, you purchase the home, the title is in your name, the deed is in your name. And you can just take over those payments or stay on the title and then refinance out of that mortgage into your name. And again, not deal with the banks.
This will allow you to skip all of that documentation, all of that long process and it will usually save you money because you don’t have to deal with real estate agents, commissions, or deal with banks and a lot of their fees that a company getting a mortgage. t’s a smart way to do it.
And learn how to do everything that I explained and how to find those people, how to find the best properties, and how to start growing your portfolio so that you can become wealthy and grow your wealth.