Asset Based Loan Underwriting

Welcome to iThrive Ideas! The 2008
subprime crisis was a massive event that left significant damage across many
business practices. It’s amazing to me that we are still navigating the fallout
from this event, even though it was over 10 years ago.
You think we’d have moved on by now. Today, I want to talk about one of the
2008 spillover effects. To paint the picture for you, I’m going to tell you
about a hypothetical client. Let’s call him John. John is retired and wants to
buy a new home – one where his family will come for the holidays and his
grandchildren can run in the yard. John has made a lot of smart financial
decisions. He has decided to delay social security income, he’s not taking money
from his retirement accounts allowing the tax deferred growth the compound, and
living within his means and off the dividends and interest produced in his
non-retirement accounts. John calls one day, and finds the home of his dreams and
wants to make an offer. To make his offer attractive and the move easy, he would
rather not make the offer contingent on selling his current home. Then he can
take his time and move into the new home deadline free. John also wants to take
advantage of today’s low interest rates and finance a good portion of the home.
So he calls his friend that’s a mortgage broker. To his surprise, he cannot get pre-approved for a mortgage. John is baffled. He tells his friend, “I
could buy this home outright three times over with the amount of assets that I have.”
John’s friend is empathetic but tells him, coming out of the crisis, all the
lenders really care about is your debt to income ratio, and you just don’t have
enough income to support this purchase. The mortgage broker gave John some
solutions, but none of them really felt like the right thing to do. He didn’t
want to start collecting Social Security, or draw from his retirement accounts to
show income. A potential solution for John that worked for some of our clients
was to contact Quicken Loans who have partnered with Charles Schwab. They have
a unique underwriting approval that goes beyond your debt-to-income
ratio and will factor in your assets. They also offer a 0.25 percent rate
discount for Charles Schwab customers. So if you are like John, give our office a
call to see if this iThrive Idea can help you. Thank you for watching! Please
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