Wed, Aug 20, 2008
|
TCI Shopping
|
|
Featured TCI Properties |
|
Owner Financing SOLD
Holly Hill, SC
|
| Price: $79,000 | | FMV: $80,000 | |
|
|
Are You Able? Are You Willing? Understanding Credit.
| | Thursday, January 11, 2007 @ 10:44 AM EST
|  Printer Friendly Page
 Send this Story to a Friend |
Contributed by: Tom Dunn
Tom Dunn Properties
Read more archived articles about Credit and Finance
A very basic introduction to lending and what lenders look for when deciding to give you a loan- for real estate or anything else.
I've been talking to a couple of new investors about financing, and I thought it might be good to explain some of the basics of lending.
First, what exactly are lenders looking for? The answer, surprisingly, is quite simple. Lenders are really only looking for two things: ABILITY to pay and WILLINGNESS to pay.
Ability to pay is determined by answering this simple question: After you meet
all of your monthly obligations, is there enough left over to pay this new debt you're asking for? This is a matter of comparing your provable income with your actual expenses. Of course, the bank doesn't usually know your actual expenses, so they apply some formulas and educated guesswork. The income part they get from your paystubs, W2's, and tax returns.
Willingness to pay is usually determined by looking at your credit history and asking your creditors for a rating of your payment habits.
If you have a history of
paying your bills and credit obligations on time, most lenders usually assume that you will continue to do so. Different lenders, even different loan officers working for the SAME lender, will assign varying degrees of importance to these two areas.
For instance, one lender may hold the belief that, as long as you have sufficient income (ability to pay) and there is enough equity in the deal to guarantee the Lender's position should you default, the loan is worth making.
Another lender may see that, even though you make a good income, your history says you don't make your payments, so she won't make the loanCredit scores
and algorithms have made the process more complicated than it used to be, but it still boils down to these basic factors.
If you understand this, and can view yourself dispassionately through the eyes of the lender, you will know how best to improve your credit standing and get the loans you need to grow your www.business.The simple truths of the credit world allow me to make three very general recommendations to beginning investors.
First, keep your job as long as you possibly can. The steady, provable income it provides makes a very favorable impression on lenders. Second, keep your total debt as low as possible. This will ensure that when you need a new loan, the lender can see that there will be room for it in your monthly budget. Third, pay your bills on time, every time. This demonstrates to the lender that not only are you ABLE to pay your bills, you are also consistently WILLING to do so. Now, go make more offers.
Note: Tom Dunn is a writer and successful real estate investor. He is the author of the popular DealFiles Real Estate Investor Stories website. Tom resides in upstate New York with his wife and three children.
Word Cloud:
standing than continue don't about boils deal returns.
willingness educated this only won't apply beginning matter for? look href='http://www.business.t' what assume lenders quite credit third, ability www.business.t' style='font-size:10px;color:#333'>target='_blank'>www.business.t make deciding keep different really determined question: degrees loan very simple income most more hold even used (ability meet will officers says makes though budget. paystubs, possible. through favorable bbcode making. rating simple. explain position with part that, monthly offers. talking bank second, paying sufficient now, need room recommendations obligations lender can. impression investors. pay) after these i've lenders, allow answer, long things: history default, same w2's, down world grow know credit. belief instance, areas. demonstrates this, creditors you're able? improve else. algorithms guesswork. process lender, enough made able some working there possibly they introduction estate time, steady, bills basic expenses, varying payment total view provable course, might ensure yourself assign willing? auto-link looking scores general investors exactly willing pay.
ability lending lenders. asking when worth bills, over importance couple payments, obligations, loans three basics still formulas every been actual real lender's time. another usually loan- start loancredit complicated first, thought eyes truths provides anything guarantee financing, lending. have expenses. understanding consistently good surprisingly, should factors. understand give left doesn't -->he debt comparing habits. also equity answering best income, loan, willingness dispassionately
|
|
| |
Average Score: 4.4
Votes: 5
|
|
| "" | Login/Create an Account | 0 Comments |
|
| These comments are owned by the posters. We aren't responsible for their content nor endorse them.TCI Comment section - where you are the moderator!If you see an offensive post or advertisement, please use the "As Is" drop down menu to choose a topic rank, then click Moderate at the bottom. This in turn will allow registered users to view only the topics that are most relevant to the article and get rid of the advertisement spam and junk. |
|
|
