Tip #6 - Lease / Options Pt 3

Today I want to talk to you about "seasoning." This is the process of building up evidence to provide to the bank to let them know that you are a good investment opportunity and not a risk.

When most people apply for loans, because there is nothing besides their credit for the banks to make a decision on, the credit makes or breaks the decision.

But what if there was something other than just credit that the banks could look at to make their decisions? If you could provide that to the bank and give them additional information besides just your credit, you can begin stacking the odds in your favor of getting a loan.

Although many people out there have bad credit scores because of their irresponsibility, there are many out there who had great credit scores and are highly responsible people that simply had something happen to them and ruined their credit.

Some of these things could be: divorce, victim of credit fraud, temporary loss of job, medical expenses, etc.

And if any of you have ever tried to fix your credit or even simply tried to have incorrect information on your credit report fixed, you may have found that this is not an easy task.

"Seasoning", if properly done, is the X-factor that could allow you to qualify for a loan when otherwise you couldn't.

So how do you get "seasoned"? You show the bank that you can afford the mortgage and that you are responsible and can be trusted to pay on time by providing evidence that shows this.

In other words, if the bank were to give you a mortgage and your monthly payments would be $1,300/mo including your taxes and insurance, then you need to show the bank that you can afford that.

Many lease/option buyer's go into a home that may rent for $1,000 and pay on time faithfully for a year or longer only to find that the banks will not accept that as proper "seasoning."

You see, in today's market, the market rent on a property is usually less than what the mortgage on the house would be. So if the mortgage would be $1,300/mo, the bank wants to see that you can afford $1,300/mo, not $1,000.

So how do you solve this dilemna? Do you pay $1,300/mo in rent when the market rent is only $1,000? No. You utilize a down payment assistance program to make up the difference.

If done properly, you can begin to build a convincing file of evidence for the banks.

We'll go into this down payment assistance program further in the next article in a couple of weeks.

If you haven't done so already, please fill out the detailed form on our website telling us exactly what you are looking for so that we can start working on your behalf to locate something for you and also personally consult with you to find the perfect house. It's the "Submit Buyer Info" tab on the left side of our webpage.