If you are planning to get a Home Loan in Bay Area, you should be aware of the 4Cs of Lending.

Capacity

Lenders usually look for a minimum of 2 years of work history in the same line of work. Any employment gaps or extended time off must to be explained. If you had a recent job change or if your income is derived from seasonal work, your income may be considered for qualifying purposes in certain situations. However, less than 2 years of work history may be acceptable if you have been studying and your current job is related to the subject you graduated in.

Cash

Cash is the funds that are required to close the purchase transaction. It calculated as down payment + closing cost & pre paids. To qualify for some programs, you may even be required to have some cash left to cover for housing payment for few months.

Credit

Past credit performance serves as a guide in determining a borrower attitude toward credit and predicting a borrower future performance. If the credit history, despite adequate income, is poor, strong compensating factors will be necessary to approve the loan. Lenders usually examine the overall pattern of credit behavior, rather than isolated late payments. A period of financial difficulty in the past does not necessarily disqualify the borrower if they have re-established a good payment record for a considerable time period after the difficulty. To qualify not all collection accounts need to be paid off, but all Judgments have to be paid off to qualify.

Collateral

Collateral for a mortgage loan is the underlying property against which the loan is provided. While evaluating the collateral a lender underwriter looks for security, safety and soundness of the property.

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