Your Financial Presentation
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First impressions often count and the presentation of your application may very well be your first impression. The key to unlock the...
...door for a loan is not solely by your financial report.
Lenders not only look at your financial strength when deciding to loan money, but other factors, including your organizational skills, could be considered.
Other factors may be especially magnified when applying for a new construction loan. Lenders want to make sure you are capable of managing all aspects that may arise during the construction process.
A Personal Story:
After presenting our report to our lender, her...
...eye's nearly popped out of her head. She was very impressed and enthusiastic about our approach!
"It is just not common for someone to request a loan in such a way.", our construction loan officer told us. She also relayed that she wished everyone would use our method as it would make her job far easier.
Our lender was comfortable knowing that we could manage the jobs required during the building process.
All because of the way we presented ourselves to her. We were organized, well educated on the building process, we had a plan to build as much equity as we could, plus, we were going to do something that was uncommon:
We were going pay the bills so that the money would go...
...exactly where the it was allotted.
Lenders appreciate an applicant who has taken the time to thoroughly and accurately...
...prepare their financial records.
It is also important to be completely up-front and open—even if when a financial history (with in the last 7 years) hasn't been exactly the purest.
Any information that is pertinent to your financial status can affect your ability to obtain a loan.
If there's a unfavorable mark on your credit report...
...a letter of explanation should be included within your Financial Presentation.
You may think that putting together a Financial Presentation is a total waste of time due to some information being repeated on your lenders loan application. However...
...we found it to be quite the contrary—our lender absolutely loved our plan! All the the information they could ever need was in there!
Because we showed how organized and meticulous we were, our lender was more confident that we could get the job done. And that, my friend, is what helped...
...seal the deal for us.
To get started, gather your business binders and page dividers that you purchased as discussed in my materials list.
Next, construct your Financial Presentation from front to back in the following order:
Explanatory Letter, if needed.
Now, in order for your Financial Presentation to look great, let's begin by creating a...
Follow this page by a blank page.
You should always put a blank page after your cover page as you would in any other written report...
...or manuscript, it just looks more professional.
Cover Letter: This will be one of the last things to write before completing your report.
This letter is written after a budget is established for your completed home. I'm only discussing this now, because this sequence to insert your letter into the report.
Keep your letter brief and to the point. Include the purpose of your loan, the soundness of your financial status and how you intend to pay your debit.
The first paragraph contains a message of thanks for the time and consideration that your potential lender is giving you.
Remember brief and to the point, don't get mushy, keep it formal. Also state that you want to be considered for a loan whether it is for a construction loan or a final mortgage loan.
The second paragraph contains your purpose for requesting a loan.
Include why you are choosing to have a home built versed buying an existing home, the price that you are looking to spend, how much cash you have to put towards the final cost and how you will pay your final mortgage.
The Third paragraph refers to your financial soundness.
Including your employment soundness plus your knowledge of your ability to fulfill your commitment to repay your loan.
The last paragraph thanks them again and shows your desire to work with your lender in a business relationship.
This is a business transaction and you want to show that you are business minded.
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This sheet will contain you and your CO-applicant's personal information including: Address, phone numbers (work and home), birth date, and social security number.
The purpose of this sheet is so that any lender will have instant access to your personal information when needed.
You may design it any way you wish or simply use the following example as a guide...
Loan Application: You will need to obtain, complete and insert a loan application that you have obtained from the prospective lender that you are submitting your Financial Presentation.
Income Statement: This worksheet, located on the next page, will contain information that lists all of your income and expenses. This sheet will be used by your lender to help calculate your debt to income ratio and how much you qualify to borrow, as well as a reference sheet for contact your current creditors.
Balance Sheet Statement: This worksheet, located on the page after the personal Financial Worksheet, will be used by your lender to calculate your equity. And will use it also to calculate how much money you qualify to borrow.
At this point, begin inserting...
...tabbed page dividers into your presentation binder.
Insert a divider between each section listed below—make sure to label the tab on the divider according to its section.
Income Verification: You will want to gather all evidence of income that is brought in by your household, such as, your payroll stubs, earned interest reports, investment income, child support, etc.
Proof of Assets: Insert a copy of any evidence of assets that you have, such as savings accounts, stocks, bonds, vehicle registration or other real property that you own to verify proof of ownership.
Proof of Liabilities: Insert a recent copy of all your household bills to include: all credit card debt, child support payments, and any other loans that you may owe for your lender to review.
Your lender may not require you to show these documents at first, but it is a great way to show off your organizational skills.
When you have these items already in your presentation, your lender won't waist time by having to contact you for this information later on.
Credit Report: Your potential lender will run their own credit report to verify your credit worthiness.
It is a good to review your credit report prior to applying for a loan just in case there are any discrepancies.
Again, you are showing pre-planning and organizational skills. If needed, review What's My Personal Credit Report.
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This letter can help if you have had minor credit problems in the past. If you have had severe problems, especially within the past 7 years, your lender may feel that you could be a high risk investment.
Take care in preparing this letter and be thorough in your explanation. Click here to review: "negative history".
Now, take a good look at your presentation.
Do you have any concerns whether or not you can pre-qualify for a loan?
Do you feel that you owe too much debt for the income you are earning?
If your answered yes to either question: go to Debt Reduction for help. If you answered no: now, is the time to get pre-approved for both your construction loan as well as for your mortgage loan.
Pre-Qualification
It can work to your advantage to get pre-approval early in the game...
...before choosing a house plan, building site or blueprints.
You'll save a great deal of time and energy if you know how much money you qualify to borrow. Then, after pre-qualification, you want may want to take another look at my spiel about "What We Should Vs Could Borrow"?
I had to bring that up again, didn't I? It's just my way of reminding you to stick to reality of what you can truly afford to borrow on a new home. Reality can be a harsh thing, but it can also keep us grounded by preventing us from biting off more than we are comfortable chewing.
One more thing to remember when presenting your financial report to a potential lender: Don't be nervous—be friendly professional, and above all... organized!
Now...Go out there and get Pre-Approved!
Good Luck !
Ok, now that the results are in... Were You Approved?
If your results were Positive, Great!
Now, Go to the next chapter entitled : "Choose Your Home's Style".
If your results were Negative, let's Stop and look things over to see how to change that negative answer into a positive one. Continue onto the next page...
Don't Feel Defeated, it's not over yet!
Look below to find the reason for denial that suits your results and take steps to improve your situation before trying again.
You Were Denied Because—You Have Too Many Debts.
You can budget a debt reduction plan to reduce your debt. To do this you can choose my plan if it fits your needs. Go to my topic on BuildWisely's Debt Reduction Plan to take you there.
You can sell off assets to payoff your debts. This could take a great deal of thought and anguish, especially if you have some sentimental property that you might have to consider selling.
Consider your options "Wisely" and make all decisions with your mate as a team.
You can seek help from a financial planner. There are a number of good financial planners available. One possibility is to ask your lender to recommend one that you can trust.
You Were Denied Because of Your Employment History. If you haven't established a good employment history you will definitely need to fix this issue.
Either you have not been at your employment position long enough or your job performance is not quite up to par. What ever the reason may be, correct the problem and re-apply in another 6 months to a year.
You were Denied Because—You Have Yet to Established a Credit History. This one is fairly easy. Check with your lending institution to see if you can borrow a small loan or apply for a credit card.
It doesn't take very long to establish a credit history, but it takes even less time to destroy it.
Make sure that any time you borrow money, or use a credit card, that you make your payment(s) before the due date every time! And never be late—it's always better to be early!
In some cases, it may be "Wise" to set up an automatic draft for paying your payment—you'll never be late again—unless you don't have the funds to cover the draft!
Check with the FTC and Banking Commission for consumer information on this automatic drafts.
You Were Denied Because—Your Credit Has Been Damaged. This one is very difficult and takes a great deal of planning and time to get fixed.
I encourage you to work on mending your credit by paying every bill on time—every time. And don't give up—even if it takes waiting seven years to have your credit report cleared—you'll have even more home planning time.
Using BuildWisely's Debt Reduction Plan can benefit everyone. It doesn't matter if you have too much debt or not, it will help bring your family closer together by creating fun and memorable moments.
Whew!! Your'e at the end of the
Financial Analysis
chapter.
Now let's go have some fun and...
Choose Your Home Style.
Home Page
Steps:
1
Financial Analysis
2
Personal Financial Report
3
Personal Credit Report
4
How Much Can I Borrow?
5
Debt Reduction Plan
6
Protect Your Wealth
7
Shop for a Home Loan
10
Choose Your 1st Mortgage Home Loan
11
Your Financial Presentation for Home Loan
