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“Whereas renters by and large, depending on what
market you're in, your rents are generally going to edge up a
bit every single year. So, taking that hard step the first year
for firsttime home buyers is not a problem.”
The same four tests of lending apply to investors, but
guidelines are now especially tighter than with individual
home buyers. According to Ryan, a number of investors
defaulted on their mortgages during the great recession and
said, "Oh, I can't rent my property out. It's under water. I
don't want it anymore."
Ryan said many individuals and investors during the go
go years had good intentions, but the recession caused many
people to lose their jobs. Thus, they could not make their
mortgage payments. Another factor is some people could
not pay their rents, affecting investment property owners.
“The great recession was the fact that the lending
industry figured that everybody who claims they can drive a
Lamborghini has the right to drive a Lamborghini. It didn't
work out, and now there are people who say, ‘Why doesn't
my 800 credit score get me a loan?’ Well, because of tens of
thousands of other people with 800 credit scores proved that
if things go bad, they don't want to be responsible for what
they signed for,” Ryan said.
Despite such issues, Ryan says for many of his clients
credit scores are not as much of a factor as many people
believe. He has worked with clients with credit scores as low
as 520—even for nonVA loans.
“So, that's a myth in the marketplace that you have to have
a 700 credit score. Low credit scores have solutions. That
really has not changed,” Ryan said.
Sometimes people tell Ryan they do not have any credit at
all after the downturn, which does pose a problem.
Fortunately, the situation is not hopeless.
Ryan’s response to them is, “Okay, that's a process. You
can fix it. Not overnight. If you didn't get here in three and a
half days, it's not going to be getting cured in three and a half
days.”
Regarding the asset testing part of the lending process,
Ryan said, “If you need a down payment and closing costs,
we kind of need to know where the money's coming from. We
could not do mattress money in the gogo years, and we
cannot do mattress money today. We still have to show where
the money is coming from, so that's really not a lot of
change.”
To learn more about Michael Ryan, visit https://michaelryan.com/, email mike@michaelryan.com, or call 4089861798. He offers
complimentary 30minute consultations, which can be scheduled on his website.
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