David Kim, a Realtor with Village Properties, brings the scoop on lending in the current environment. Here is an interview with Jeff Bochsler, a mortgage loan officer for Bank of America.
David Kim: Many see Santa Barbara real estate as something beyond their reach. However, with the past couple years of price declines, is homeownership more attainable? How does one find out if this is realistic?
Jeff Bochsler: The prices of the past conditioned many into believing that renting would be for life in Santa Barbara, that it’s the one concession many make to live in paradise. No longer is this true.
Affordability is up dramatically because of lower home prices and historically low interest rates. The best way to find out if you, too, can own a piece of this perfect climate is by contacting a local home loan officer. It costs nothing. The time commitment is generally an hour. And whether you are prepared to buy today or not, the experience will be worth it. You will have a clearer view of what needs to be done, what disciplines to set in place, savings plans initiated and people to contact. A good loan officer will help you create a realistic plan. You now have something to save for. It is possible.
DK: I hear loans are harder to come by. Aside from having a down payment and consistent income, what can be done to ensure the best chance at getting a loan approved?
JB: You are already on the right track. Having a down payment and consistent income wasn’t even necessary four years ago, given the zero percent down and stated income loans. Today, they are both essential.
If you want to stand out, there are action steps you can be taking. It’s extremely helpful to begin filing together your income and asset information. Be detailed. Each time you receive your paycheck, bank statement, 401(k) quarterly or any other statement that pertains to your liquid assets, file all pages into a folder. Be sure to include in the folder the past two years of tax returns. Being able to quickly and easily resource this necessary documentation will ensure your loan officer has a complete and up-to-date file.
A complete file allows the loan officer to make recommendations based on your truest economic state. It affords him or her the information to tell a compelling and realistic story to the underwriting team. Remember, your financial resume is meant to show you are credit worthy. It’s meant to prove to the bank that you’re prepared to consistently make your home loan payments. Moreover, complete documentation guarantees the file isn’t piecemealed to the underwriter. Piecemealing documents leads to the underwriter looking at the file over and over again. Limit the question marks by limiting his or her viewings of your file.
You have a chance to stand out among the rest. Be prepared and detailed. Be honest with your loan officer. And enjoy the joys of homeownership.
DK: What about people who don’t have enough money for a down payment, but just landed a great job in town. Are there options out there for them?
JB: Yes. Even though a down payment is necessary on all purchases, there are loan options that allow you to receive a gift for the entire down payment. Many families help their children, siblings or parents get into a home by aiding in the down payment. Should you have these resources, you may just qualify. Do yourself a favor, though: Make sure you have a couple months of insurance dollars in case of an emergency.
DK: What’s this I hear about your “open door policy”?
JB: My door is always open. My cell phone is on and reachable. I stand ready and willing to run your numbers.
— David Kim is a Realtor with Village Properties.