Sol Skolnick, Professor Home Loan - A STEP-BY-STEP GUIDE TO FINANCING YOUR HOME

A recent foreclosure or a deed in lieu also requires early disclosure to your lender so that they can factor that in when trying to determine which loan products may be available to you. A deed-in-lieu of foreclosure is an arrangement where you voluntarily turn over ownership of your home to the lender to avoid the foreclosure process.

Short Sale

When a homeowner has mortgage debt that is worth X, and sells that mortgaged home for a price that is less than X, that is called a short sale. Lenders see prior short sales as a potential impediment to a loan approval. In a short sale the previous lender gave the borrower a certain amount of money and the borrower didn’t pay it all back.

Vehicle Repossession

Lenders take vehicle repossessions seriously. Like a short sale or a foreclosure the borrower has been unable to meet their financial obligation in repaying the lender.

Payment Shock

Payment shock is a calculation used to highlight how much new expense a borrower will incur when taking out a mortgage. Mortgage lenders create their threshold formulas to determine if the ratio of your current rent or home loan payments to proposed mortgage payments is low enough to prevent payment shock. Underwriters calculate payment shock by dividing the new proposed housing payment by the old monthly housing payment. It is common for lenders to not finance a borrower whose payment will be 200% or more of their current housing payment.

49

Powered by