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Author: Harry Panosian

Credit and Lending

Why This Blog? 

Hi, my name is Harry Panosian, and I have been in the mortgage business for over 25 years. I worked for a mortgage banking firm early in my mortgage banking career. Since 2002 I’ve owned Blake Mortgage, NMLS ID 150459, an Arizona-licensed mortgage broker specializing in residential mortgages. 

I’ve always wanted to write a book on mortgage finance but have yet to set aside the time to do it. I wanted to write this book to teach people what I learned while originating loans. Throughout my career, I’ve realized that ordinary and extraordinary people struggled with the process. What’s scary is that most consumers need to understand how they arrive at an interest rate and fees to which they agree to pay for the loan term. 

Even the most sophisticated borrowers need help understanding how to price a loan so that they are paying the lowest given rate with the lowest offered fees at the time the loan funds. Rates and fees are a market function, and that cycle has to follow the consumers buying or refinancing cycle. If interest rates are on an upward trend, it will naturally cost more to borrow money, and if they are on a declining trend, it will cost less. Of course, that’s oversimplifying it, but it is one of the many factors discussed in the following blog series.

This Blog series aims to teach you a shortcut to an outcome. What do I mean by that? This course will not make you an expert in mortgages, nor make you a loan officer for which you need a license to practice, but it will teach you step-by-step how to shop for the cheapest fees and the lowest rate for your given mortgage transaction. What I’m about to share with you is not rocket science, but you need to do a teeny-weeny bit of homework, which will save you tens of thousands of dollars throughout the term of your loan. 

The Internet has millions of pages about rates, fees, loan programs, etc. Still, none shows the industry insider knowledge you need to get the lowest interest rate with the lowest costs on your next mortgage. When you complete this shortcut to an outcome, you will keep more of your hard-earned money in your pocket and not give it to the bank. 

Harry Blake Panosian 

Harry Blake Panosian


Please remember that this blog should not be considered legal or tax advice. Please consult your attorney or CPA for tax and legal advice.

The discussed laws and principles are as they apply in the state of Arizona only. However, you could use rate and fee shopping techniques discussed in any jurisdiction subject to federal banking laws, the Dodd-Frank Act, the CFPB, RESPA, the “Truth in Lending Act,” and other applicable laws. 


Before you start shopping for a mortgage or, better yet, before you even call the realtor, please go to this URL www.annualcreditreport.com and get a free copy of your credit report. The government allows you an annual retrieval of your credit report, giving you a snapshot of your credit profile for your entire life. 

Remember, don’t call the realtor. Stay out of the Internet looking for a mortgage broker. Do this first. 

The second step is to review your credit and ensure that your information is accurate and that your credit balances are correct. Look for inconsistencies, late payments, charge-offs, liens, and other irregularities. With clear credit, sufficient income, and assets to cover your debt-to-income ratio, and you have the required down payment, you will get a mortgage.  

You have work to do if you have any late payments, incorrect credit balances, bankruptcies, charge-offs, medical collections, and tax liens which are notorious for ruining credit reports. 

I can share an anecdote about a doctor whose own practice had submitted an unpaid balance on a medical insurance claim to a collection agency. It was the doctor’s practice turning him into the collection agency. He still needed to learn that the insurance company had yet to pay a hundred percent of the claim. People sometimes forget that just because you have health insurance, the insurance company will cover the billed items from the hospital or doctor. In reality, the insurance company may only pay a portion, and some of that bill may be your responsibility, which people tend to ignore. Then months go by until they discover a medical collection has been charged-off and credit ruined. 

Credit Bureaus  

Three credit bureaus are repositories of your financial DNA. They are:  

a. Experian  

b. Equifax   

c. Trans Union  

These three credit bureaus receive your payment history monthly from most of your creditors. Each creditor may have their reporting timetable, but they report to the repositories each month. 

If you notice, I said “most “of your creditors and not all of your creditors. The reason is some creditors choose not to report to avoid competing creditors from raiding their accounts with new offers. It is especially true for creditors with higher rates than the market, who want to keep those accounts from competing offers with lower interest rates. 

To stay on top of your credit, you should sign up with one of the credit bureaus mentioned above for monthly reporting of your credit profile. This service is free if you sign up with one credit bureau. They will try to upsell you to sign up for all three bureaus, which will set you back, usually by thirty dollars or more. You do not need to do this. Just sign up for the free one. 

In addition to the credit bureaus, there are credit reporting agencies which number in the hundreds, that provide the tri-merge credit report that most lenders require, which shows all of your credit scores from the three repositories. More on that later. 

As I mentioned, if you have any dings on your credit, such as late payments collections, charge-offs, bankruptcies, repossessions, short sales, foreclosures, etc., you need to address them individually. There’s nothing you can do about late payments other than make sure that they reflect the true nature of the delinquency. Time will heal them, and it depends on the type of debt. Mortgage late payments are a big no-no. That is supposed to be your most important obligation, and lenders frown upon that. Different guidelines apply depending on the mortgage loan you are trying to get. However, that is one of the more severe delinquencies you could have. Government programs are generally more forgiving on credit dings than other conventional financings. 

If there are any open collections on your credit report, it behooves you to contact the collection agency, and you can usually negotiate a lower settlement than what’s outstanding. However, the longer the collection stays “open, “the more impact it will have on lowering your credit score. 

During the great recession, which we’ll discuss in detail later, there were a lot of foreclosures. “Short sales” were not even invented then. Government-sponsored agencies that securitize many conforming loans relaxed some of the restrictions governing these loans, but there is still a “Seasoning “requirement on these events. 

Identity Theft & Credit Freeze  

Not a day goes by that you don’t hear about somebody’s identity being “stolen” and their lives ruined. Or worse. You hear about some hacker from a remote location hacking into a large corporation’s database and stealing personal data, including Social Security numbers, dates of birth, home addresses, income information, etc. 

Cybersecurity experts continuously remind us to protect our online access with sophisticated passwords and change them regularly to stay ahead of the hacker’s reach. It is a cumbersome process. Yet necessary. Identity theft protection will not guarantee against hacker intrusion. If you want to avoid this type of violation against you, it’s best to have your credit frozen at each of the three credit bureaus. It can make things a little bit more difficult for you, but if you do not need an immediate loan, you could always unfreeze your account, and once you complete the transaction, you can “Freeze” your credit again. 

If you put a credit “freeze” on your account and apply for credit, lenders will contact you for permission to do what they need. 

FICO & Credit Scoring 

Watch this video: 


Credit scoring is a numerical representation of your credit habits. It considers available credit at your disposal, the amount utilized, payment and length of history, the number of recent inquiries, and new and open accounts — other factors include derogatory items that we discussed earlier. 

Since there are three separate credit repositories, each provides its credit scores. Most lenders use the middle number of the three to represent your overall credit. 

Your credit scores will determine what loan programs may be available to you. The higher your credit score, the more liberal your lending terms will be. FICO scores range from a low of 300 to a high of 850. Most lending programs will not lend on scores below 620. There are, however, exceptions to this rule, as nonconventional lenders may lend on scores as low as 500. But the rates on these types of loans that are considered subprime loans will be prohibitive, and the down payment requirement will be a lot more than conventional loans. 

What if you do not have a credit score or any conventional credit? Some programs will use nonconventional credit, such as your monthly rent payments, utility payments, etc., to underwrite your file manually, but that is beyond the scope of our conversation here. 

Just remember to maintain good credit habits by paying your bills on time, making prudent decisions with your use of credit, and refraining from opening those tempting department store and hardware store offers to open new credit in return for a discount on your purchase at the store, may hurt you on the long run. 

Credit Lates & Foreclosures 

In a deed of trust state like Arizona, generally, once you are 90 days late, the lender will commence the foreclosure process with a “NOD” or a “Notice of Default.” A “NOD” means you will get a letter from the lender citing a notice of default, threatening to auction your home at a public sale on the courthouse steps. The late fees will start mounting, and legal fees will soon ensue if you cannot bring the current loan. Finally, the foreclosure process will begin.

In non-deed of trust states, the process is different and usually takes a more extended period, as foreclosure is a judicial process. It means that it will go through the courts until you settle. 

You want to avoid foreclosure at all costs. 

The great recession in 2008 brought a slew of foreclosures, short sales, and bankruptcies. It reached unheard-of levels as homeowners could not keep up with their mortgage payments. As a result, their property values severely declined, consumers lost jobs, and many properties had encumbrances greater than their appraised values. As a result, consumers unable to sell abandoned these properties, and lenders began foreclosing on them. This chain of events had a tremendous impact on the real estate market for years.  

Recovery was slow. The foreclosure and short sale effects on credit scores were severe. Consumers who were once homeowners were now paying rent. For a borrower to qualify for a conventional mortgage, lenders generally require seven years of seasoning for foreclosures. Since this catastrophe, lenders have eased up on the seasoning requirements for foreclosures and short sales. At this writing, the seasoning requirement on a Fannie Mae and Freddie Mac loan for “Foreclosure” and “Short sale” is generally four years. Please check with your lender for the specific seasoning requirements. Typically, federally insured and guaranteed loans such as FHA and VA have a more liberal seasoning requirement. 

A chapter 7 bankruptcy also has a four-year requirement, and lenders frown upon borrowers who have Any credit dings post-bankruptcy. 

These seasoning requirements are continually changing depending on market conditions. It used to be that all short sales and foreclosure seasoning was seven years. 

Short Sales  

The “short sale” came into vogue with the advent of the great recession. The overwhelming number of foreclosures was causing an oversupply of inventory. Lenders came up with a solution: the Short Sale. By working with homeowners who had lost their jobs and could no longer afford their mortgage payments, the short sale provided them with a more graceful exit. It made those properties available for purchase by other borrowers. The process usually took 6 to 12 months, and realtors started specializing in short-sale property. The Short Sale solution eased the oversupply of inventory in the marketplace, and it was the beginning of the recovery in the housing market. 

Even though the short sale alleviated the oversupply in inventory, the impact on credit scores was severe. However, As the market recovered, Fannie Mae and Freddie Mac were more lenient on consumers with short sales instead of “foreclosures.” This distinction would help borrowers later as they tried to get new mortgages as the seasoning requirement was different for foreclosures versus short sales. 


There are three types of bankruptcies:  

 Chapter 7, Chapter 11, and Chapter 13 

Generally, getting a conventional loan will be challenging if you have any bankruptcy that is still in process.  

Once you have established credit after bankruptcy and do not have any derogatory credit, post a specific “Seasoning” period, you will most likely be able to get a conventional loan if all other underwriting criteria are met, such as income, assets, employment, and down payment.

Government programs have more liberal seasoning requirements than conventional loans. Check with your loan officer to see the applicable seasoning for the given loan program. 

Some programs out there charge very high fees and interest rates that will finance borrowers with more recent bankruptcies; however, they require large down payments. Therefore, I suggest scrutinizing these programs before originating such a loan. 

Credit Rescoring  

Credit rescoring occurs when a borrower is a few points shy of a target credit score, and they pay down some debt and get their rescoring entity to do a simulation that will, in most cases, bring up the credit score for a borrower to qualify for a given loan. 


You have to pay tax and mechanic’s liens before or at funding; otherwise, you will not be able to get the loan. These liens take precedence over a first mortgage; therefore, the lender will not fund the loan when these liens are present. 

Furthermore, even if paid off, a federal tax lien may disqualify a borrower because the lender will most likely require additional information for the delinquency. 

Credit Inquiries  

Inquiries constitute 15% of your credit score. Therefore, repeated queries to open new accounts, especially in the last 24 months, may hurt your overall score. 

Applicants are always concerned that a credit inquiry will impact their scores adversely, especially when applying for a mortgage loan if various lenders pull their scores repeatedly. In addition, consumer credit inquiries from online retailers and many others will also impact the score.

The best way to avoid this would be to do your homework ahead of time with annual credit report.com and be confident of your score. 

 Borrower’s History  

Your credit report also includes the following:

  • Your employment history.
  • Residential history.
  • Any variations of your name.
  • Phone number.
  • Date of birth.
  • Any tax lien.
  • Bankruptcy.
  • Other types of delinquencies. 

Be aware that the consumer credit act compels creditors to remove derogatory credit from your credit report over seven years old. Some exceptions apply here. Please check out the link below for more information on the consumer-credit-protection-act.


How to Shop for A Mortgage

Shopping for a mortgage can be daunting, but it’s essential to securing a home loan that fits your needs and budget. The Consumer Financial Protection Bureau (CFPB) has created a “Home Loan Toolkit” to help you navigate the process. This guide will break down the critical steps in the shopping process, including understanding the different types of mortgages, comparing offers from multiple lenders, and negotiating the terms of your loan.

Step 1: Understand the Different Types of Mortgages

Before you start shopping for a mortgage, you must understand the different types of mortgages available. The most common types of mortgages are:

  • Fixed-rate mortgages: These mortgages have a fixed interest rate for the life of the loan, typically 15 or 30 years. Your monthly payment stays the same throughout the loan term, making budgeting easier.
  • Adjustable-rate mortgages (ARMs): These mortgages have a variable interest rate that changes over time. ARMs usually have a lower initial rate than fixed-rate mortgages, but your monthly payment can increase or decrease based on market conditions.
  • Government-backed mortgages: FHA, VA, and USDA loans are insured by the government and often have more flexible credit and income requirements but may require mortgage insurance.

Once you understand the different types of mortgages, you can start to determine which type of loan is best for you based on your financial situation and long-term goals.

Step 2: Compare Offers from Multiple Lenders

When shopping for a mortgage, comparing offers from multiple lenders is essential to find the best deal. Here are the key factors to consider when comparing offers:

  • Interest rate: The annual percentage rate (APR) your loan charges. A lower interest rate means you’ll pay less in interest over the life of your loan.
  • Points and fees: Lenders may charge points and fees, upfront costs added to your loan. Comparing these costs between lenders ensures you get the best deal.
  • Loan term: This is the length of time you have to repay your loan. A longer loan term may result in a lower monthly payment, but you’ll pay more in interest over the life of the loan.
  • Closing costs: These are the costs of closing your loan, such as appraisal, title insurance, and attorney fees. Comparing closing costs between lenders is essential to ensure you’re not overpaying.

When comparing offers, request a Loan Estimate from each lender. This document outlines the terms of your loan and provides an itemized list of all costs associated with the loan. Use this document to compare offers and negotiate with lenders.

Step 3: Negotiate the Terms of Your Loan

Once you’ve compared offers and selected a lender, it’s time to negotiate the terms of your loan. Here are some key factors to consider when negotiating:

  • Interest rate: You can negotiate a lower interest rate with good credit and a solid financial history. Be sure to provide documentation of your financial history to support your request.
  • Points and fees: You can negotiate lower points and fees.
  • Loan term: If you’re struggling to make the monthly payment on a 15-year fixed-rate mortgage, you can negotiate a longer loan term to reduce your monthly payment.
  • Closing costs: You can negotiate lower closing costs by shopping around for services or asking the seller to pay some of the costs.

It’s important to remember that not all lenders are willing to negotiate, so be prepared to shop around if you’re not satisfied with the terms offered by your lender.

Step 4: Close Your Loan

Once you’ve negotiated the terms of your loan, it’s time to close the loan. Here are the critical steps in the closing process:

  • Review the Closing Disclosure.
  •  Your lender is required to provide a Closing Disclosure at least four days before closing. This document outlines the final terms of your loan, including the interest rate, points and fees, and closing costs. Review this document carefully to ensure there are no errors or surprises.
  • Arrange for a final walkthrough: Before closing, you’ll want to do a final walkthrough of the property to ensure everything is in order and any repairs have been completed.
  • Bring required documentation: You’ll need to bring several documents to closing, including proof of homeowners insurance, government-issued ID, and funds for the balance of your down payment and closing costs. You may also wire the funds in advance.
  • Sign the paperwork: At closing, you’ll sign a lot of paperwork, including the mortgage note, the deed of trust, and various disclosures. Be sure to read everything carefully and ask questions if anything needs clarification.
  • Fund the loan: Once you’ve signed all the paperwork, your lender will fund the loan, which means they’ll transfer the money to the seller, and the property will officially become yours.

Closing a loan can be complex, so working closely with your lender and real estate agent is essential to ensure everything goes smoothly.

Step 5: Manage Your Mortgage

Once you’ve closed your loan, managing your mortgage responsibly is essential to ensure that you don’t fall behind on payments and risk foreclosure. Here are some tips for managing your mortgage:

  • Set up automatic payments: Many lenders offer the option to set up automatic payments, which can help ensure you never miss a payment.
  • Stay up-to-date on your taxes and insurance: Your lender will likely require you to escrow your property taxes and homeowners’ insurance, which means they’ll collect these payments as part of your monthly mortgage payment. It’s crucial to stay up-to-date on these payments to avoid penalties and coverage gaps.
  • Monitor your credit: Your mortgage payment history is reported to the credit bureaus, so it’s essential to monitor your credit score and report for any errors or issues.
  • Refinance if necessary: If interest rates drop or your financial situation improves, consider refinancing your mortgage to lower your monthly payment or pay off your loan faster.

Shopping for a mortgage can be a complex process. Still, by understanding the different types of mortgages, comparing offers from multiple lenders, negotiating the terms of your loan, closing the loan, and managing your mortgage responsibly, you can find a home loan that fits your needs and budget. The CFPB’s Home Loan Toolkit provides additional information and resources to help you through the process.

For more information or to set up a free consultation, please click here:

To get started today, click here:

Mortgage for Rental Property: A Complete Guide

Investing in rental property can be a lucrative financial decision for those with the resources to do so. However, one of the critical factors in successfully owning a rental property is securing the right mortgage to finance it. This guide will discuss the various loan options available, the application process, down payment requirements, closing costs, tax benefits, risks, challenges, and frequently asked questions about obtaining a mortgage for rental property.

Loan Options

When it comes to securing a mortgage for rental property, there are several loan options available. Here are a few of the most common:

Conventional Loans:

These loans are not backed by the government and typically require a higher credit score and down payment. The interest rates for conventional loans are often lower than government-backed loans.

FHA Loans:

These loans are backed by the Federal Housing Administration and are designed for first-time homebuyers or those with lower credit scores. FHA loans have lower down payment requirements but typically have PMI, which translates into higher interest rates. FHA Loans are for primary homes only. Click here for more info on FHA loans.

VA Loans:

These loans are backed by the Department of Veterans Affairs are available to current and former members of the military and their spouses. VA loans typically have lower interest rates and do not require a down payment. VA Loans are for primary homes. Click here for more info on VA loans.

USDA Loans:

These loans are backed by the U.S. Department of Agriculture and are designed for those purchasing properties in rural areas. USDA loans often have lower interest rates and do not require a down payment. However, these loans are only for primary homes as well.

Non-QM Loans:

These are Non-Qualified mortgages, the funding source for which is from private investors and generally require a 25% down payment and no income documentation is needed so long as the DSCR (Debt service coverage ratio,) meets the lender’s requirement. Click here for more info on DSCR loans.

Application Process

The mortgage application process for rental property is similar to a traditional home purchase. Here are the steps involved:


Before beginning your property search, getting pre-approved for a mortgage is a good idea. The pre-approval will show you how much you can afford to spend on a rental property.

Property Search:

Once you are pre-approved, you can begin your property search. Remember that lenders may have specific requirements for the type of property they will finance, such as the number of units and the property’s condition.

Submit Application:

You must submit a mortgage application when you find a property you want. The application includes information about your income, assets, and credit history.

Property Appraisal:

 After submitting your application, the lender will order an appraisal of the property to determine its value.


Once the appraisal is complete, the lender will begin underwriting the loan. This process involves verifying your income and employment and reviewing your credit history and other financial information.


If your loan is approved, you will need to attend a closing meeting to sign the loan documents and pay any closing costs.

Down Payment:

The down payment required for rental property will depend on the type of loan you are applying for and the lender’s requirements. Generally, conventional loans require a down payment of 20% or more.

Putting down a larger down payment can help reduce your monthly mortgage and even help you secure a lower interest rate.

If you do not have the funds available for a down payment, there are some options for financing it. For example, you can take out a personal loan or use a home equity loan from another property you own.

Closing Costs:

Closing costs are fees associated with obtaining a mortgage, including appraisal, title insurance, underwriting, origination, and escrow fees. The total closing cost can range from 2% to 5% of the total loan amount. Some lenders may offer to cover some or all of the closing costs, which often results in a higher interest rate.

Tax Benefits:

Owning rental property can come with several tax benefits. One of the most significant benefits is the ability to deduct mortgage interest from your taxable income. In addition, other rental property expenses help reduce your overall tax liability and increase your cash flow.

Additionally, rental property owners may take advantage of depreciation deductions, which allow them to deduct a portion of the property’s value over time. However, It is important to note that tax laws can be complex, and consulting with a tax professional is recommended to ensure you maximize your deductions and follow all applicable tax laws.

Risks and Challenges:

Owning rental property can also come with several risks and Challenges. One of the most significant risks is the possibility of vacancies, which can lead to a loss of income and difficulty making mortgage payments.

Additionally, rental properties require ongoing maintenance and repairs, which can be costly and time-consuming. Managing tenants can also be challenging, as you may encounter difficult tenants or deal with eviction proceedings.

Therefore, before investing in rental property, it is essential to carefully consider these risks and challenges and ensure you have the financial resources and expertise to manage them.


How do I qualify for a mortgage for a rental property?

To qualify for a mortgage for rental property, you will typically need to have a good credit score, a stable income, and a down payment of at least 20% for a conventional loan. You may also need to meet specific requirements set by the lender, such as a certain debt-to-income ratio or a minimum rental income requirement.

What are the required documents for a mortgage application?

The documents required for a mortgage application may vary depending on the lender, but typically include proof of income (such as tax returns and pay stubs), bank statements, and documentation of any assets or debts.

What should I consider when choosing a loan for a rental property?

When choosing a loan for rental property, you should consider factors such as the interest rate, down payment requirements, and closing costs. You should also consider the type of loan that best fits your financial situation and investment goals.


Obtaining a mortgage for rental property can be a complex process, but with the correct information and resources, it is possible to navigate it successfully. By understanding the various loan options, the application approach, down payment requirements, closing costs, tax benefits, risks and challenges, and frequently asked questions related to rental

property mortgages, you can make informed decisions and maximize your chances of success as a rental property owner.

For more information, schedule an appointment with Blake Mortgage by clicking the link below.

Mortgage Rates Rising!

Mortgage rates have spiked up to almost 7%, the highest level over a decade, causing concern among homeowners and potential buyers alike. Inflation is a crucial factor impacting mortgage rates and the real estate market, and it’s essential to understand the implications of these trends. This article will explore why mortgage rates have spiked, how inflation affects the real estate market, and why it’s important to buy now versus wait later.

Mortgage rates have spiked due to a variety of factors, including:

  1. Inflation: Inflation is the primary driver of higher mortgage rates. The Federal Reserve may raise interest rates to combat inflation as inflation increases. When interest rates rise, so do mortgage rates.
  2. Economic Growth: Economic growth can also impact mortgage rates. As the economy grows, demand for credit increases, leading to higher interest rates.
  3. Government Policy: Government policies can also impact mortgage rates. For example, the Federal Reserve’s decision to end its bond-buying program in 2014 led to higher mortgage rates.

How Inflation Affects the Real Estate Market?

Inflation significantly impacts the real estate market, particularly in areas with high demand and limited supply. The following are some of the ways inflation is impacting the real estate market:

  1. Higher Home Prices: As inflation increases, so do home prices. The increase in home prices is due to the higher cost of building materials, labor, and other inputs, driving up the cost of new homes. In addition, existing homeowners may be more reluctant to sell their homes, as the cost of buying a new home is also higher.
  2. Higher Mortgage Rates: Higher inflation leads to higher mortgage rates, making it more expensive to buy a home. Higher rates can dampen demand and slow down the housing market.
  3. Tighter Credit Standards: Inflation can also lead to tighter credit standards, as lenders become more cautious about lending in a higher interest rate environment. Stricter underwriting criteria make it more difficult for some buyers to qualify for a mortgage.

Buy Now versus Later?

Given the current trends in the real estate market, buying now may be advantageous rather than waiting. Here are a few reasons why:

  1. Mortgage Rates are Likely to Continue Rising: Mortgage rates have already spiked and will continue rising as inflation remains high. The cost of borrowing will be higher in the future, making it more expensive to buy a home.
  2. Home Prices are Also Likely to Continue Rising: As we’ve discussed, inflation drives home prices, which will likely continue. Waiting to buy a home may mean paying more in the future as home prices continue to rise.
  3. Limited Supply: In many markets, there is a limited supply of homes for sale, making it challenging to find the right home at the right price. It may mean you need more inventory to buy a home.

In Conclusion …

The Greater Phoenix market is experiencing many of the same trends we’ve discussed above. Here are a few key points to consider:

  1. Home Prices are Rising: According to Zillow Phoenix the median home value in Phoenix is currently $398,899, an increase of 4.6% over the past year. In Scottsdale, the median home value is $750,908, up 6.3% over the past year. Zillow Scottsdale

     2. Limited Inventory: There is a limited inventory of affordable homes for sale in all three markets.

     3. High Demand: Despite rising home prices and limited inventory, demand remains high in these markets. 

Given the current trends in these markets, buying now may be advantageous rather than waiting later. However, with a limited inventory of affordable homes and high demand, waiting to purchase a home may mean missing out on the limited stock that is currently available. In addition, as mortgage rates continue to rise, the cost of borrowing will be higher, making it more expensive to buy a home.

In conclusion, various factors have spiked mortgage rates, including inflation, economic growth, and government policy. Inflation is significantly impacting the real estate market, leading to higher home prices, higher mortgage rates, and tighter credit standards. Given these trends, buying now may be advantageous rather than waiting later, especially in markets with limited inventory and high demand, such as Phoenix, Arizona, Scottsdale, and Maricopa County. By acting now, potential buyers can take advantage of the limited inventory and lower mortgage rates, securing a home at a lower price and avoiding higher borrowing costs in the future.

“No Cost Loan?” There’s No Free Lunch!

Over the years, lenders have marketed a specific type of loan generically known as a “No-cost loan.”

There is no free lunch!

What do I mean by that? First, there are many costs associated with originating the loan. It includes underwriting, credit reporting, appraisal, inspection, escrow, title insurance, endorsements, origination, taxes, homeowners association, courier, notary, insurance, and other fees required to originate and fund a mortgage loan.

The loan estimate and closing disclosure break down these fees so the borrower can see the actual cost.

One of the most significant fees associated with the origination process is the origination fee, which is a fancy way of saying the broker’s commission. For example, suppose the borrower decides to “Buy down” the rate. In that case, they pay a discount fee. As the borrower, you get to choose the interest rate you want to pay for your loan, but the price you pay for this rate at par has zero discount or zero premium points. Therefore you must pay an origination fee to the broker. Each broker has their origination agreement that they charge on loans. Suppose the borrower does not want to pay this origination fee, which is usually 1% of the loan amount; In that case, they can bump the interest rate to a higher rate, and the lender will pay a yield spread, which is a percentage of the loan amount they can use to pay for some of the costs associated with the loan.

not a free lunch

The borrower can’t use the yield spread to pay the broker’s origination fee, but it can help pay for other loan costs, such as the title insurance or appraisal fee.

There are two types of compensation on loans: lender-paid compensation and borrower-paid compensation. In a lender-paid compensation scenario to the broker, the interest rate includes the lender-paid compensation agreed upon in advance with the lender. This rate/APR is usually higher than the rate/APR for “borrower-paid compensation,” which the borrower will pay out of his funds. Usually, the yield spread will be 1% of the loan amount for every quarter-point increase in interest rate. For example, say the broker quotes a rate of 6% for a 30-year fixed loan for $100,000. Generally, if the rate is bumped up by 25 basis points or to 6.25%, the lender will pay you 1% of the loan amount, or $1000, for you to use for your closing costs. In a lender-paid compensation scenario, the additional yield is characterized as lender-paid compensation “outside of closing.” Meaning that it will not come out of your funds at closing. However, in the long run, you will be paying more interest to compensate the lender for the upfront “lender-paid compensation to the broker. Sometimes, it makes sense to go for lender-paid compensation, especially if you won’t be in the house for an extended period. First, however, you must calculate the benefit of the higher interest rate and how that will impact your cash flow. Usually, it is in your best interest to negotiate the broker’s compensation and pay the broker from your funds. The “Loan Toolkit,” comes in handy, as you can compare multiple lenders’ offers and see which works best for you. Therefore, the actual cost of the “No-Cost” mortgage loan is in the details. By increasing your interest rate, you are paying a higher interest rate/APR and, therefore, more interest over the life of the loan than you would otherwise if you chose to pay all the loan’s closing costs yourself. Sometimes it makes sense to go for the higher rate, especially if you’re tight on cash and need help closing the loan with funds from other than your own.

To summarize, a “No-Cost” mortgage loan is a type of loan marketed by lenders as having no closing costs. However, this is not entirely accurate, as there are still costs associated with originating the loan, such as underwriting, credit reporting, appraisal, inspection, escrow, title insurance, endorsements, origination, taxes, homeowners association, courier, notary, insurance, and other fees.

One of the most significant fees associated with the origination process is the origination fee, which is the broker’s commission. If the borrower decides not to pay this fee, they can opt for a higher interest rate, and the lender will pay a yield spread, which is a percentage of the loan amount they can use to pay for some of the costs associated with the loan. However, in the long run, the borrower will pay more interest to compensate the lender for the upfront lender-paid compensation to the broker.

Therefore, the actual cost of a “No-Cost” mortgage loan is in the details. It is essential to calculate the benefit of the higher interest rate and how that will impact your cash flow in the long run. It may make sense to negotiate the broker’s compensation and pay the broker from your funds. The Loan Toolkit at www.blakemortgage.com/loan-toolkit can be helpful in comparing multiple lenders’ offers and determining which works best for you.

It’s important to note that sometimes it may make sense to go for a higher interest rate, especially if you’re tight on cash and need help closing the loan with funds from sources other than your own. However, it’s crucial to weigh the benefits and drawbacks of each option and determine which is the most cost-effective in the long run.

When considering a “No-Cost” mortgage loan, it’s crucial to review the loan estimate and closing disclosure provided by the lender. These documents will break down all the fees associated with the loan, including the interest rate, and help you determine the actual cost of the loan. In conclusion, a “No-Cost” mortgage loan may sound like an attractive option, but it’s essential to understand that there are still costs associated with originating the loan. It’s crucial to weigh the benefits and drawbacks of each option and determine which is the most cost-effective in the long run. Reviewing the loan estimate and closing disclosure provided by the lender and negotiating with the broker can help you make an informed decision and ensure that you’re getting the best deal possible.

Bank Statement Loans for The Self Employed

In recent years, bank statement loans have become increasingly popular as an alternative form of financing for those who may not meet traditional lending criteria. These loans are specifically designed for self-employed individuals, small business owners, and entrepreneurs who have difficulty providing the necessary documentation to prove their income.

What are bank statement loans?

Bank statement loans, also known as self-employed loans or alternative income verification loans, are a type of mortgage that allows borrowers to use their bank statements as proof of income. This means that instead of providing traditional income documentation such as pay stubs or W-2s, borrowers can use their bank statements to demonstrate their income over a specific period, typically ranging from 12 to 24 months.

The lender will review the borrower’s bank statements to determine their income and assess their ability to repay the loan. Typically, lenders will require a minimum of 12 months of bank statements, and some may require up to 24 months. The bank statements will need to show consistent deposits, and the lender will also consider the borrower’s credit score, debt-to-income ratio, and other financial factors when making a lending decision.

How do bank statement loans work?

Bank statement loans work similarly to traditional mortgages. The borrower will apply for the loan and provide the necessary documentation, including their bank statements. The lender will review the application and assess the borrower’s creditworthiness based on their credit score, debt-to-income ratio, and other financial factors.

If approved, the lender will offer a loan with specific terms, including the interest rate, loan amount, and repayment period. The borrower will need to review and sign the loan agreement, and the lender will disburse the funds directly to the borrower or their designated account.

One key difference between bank statement loans and traditional mortgages is the interest rate. Bank statement loans typically have higher interest rates than traditional mortgages due to the higher risk associated with borrowers who cannot provide traditional income documentation. However, these loans offer an alternative for those who may not qualify for traditional mortgages.

What is required for a bank statement loan?

To apply for a bank statement loan, borrowers will need to provide the following documentation:

  1. Bank statements: Borrowers will need to provide a minimum of 12 months of bank statements, and some lenders may require up to 24 months. The bank statements will need to show consistent deposits to demonstrate the borrower’s income.
  2. Credit score: Lenders will assess the borrower’s creditworthiness based on their credit score. While there is no specific minimum credit score required, borrowers with higher credit scores are more likely to be approved and may receive more favorable loan terms.
  3. Debt-to-income ratio: Lenders will also consider the borrower’s debt-to-income ratio, which is the percentage of the borrower’s monthly income that goes toward debt payments. A lower debt-to-income ratio indicates that the borrower has more disposable income and may be more likely to repay the loan.
  4. Employment history: While bank statement loans are designed for self-employed individuals, lenders may still require a minimum employment history to demonstrate stability.

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Case Studies

Let’s take a look at two hypothetical case studies to understand how bank statement loans work in real life.

Case Study 1: Sarah, a freelance graphic designer

Sarah is a freelance graphic designer who has been self-employed for the past two years. She earns a good income but has difficulty providing traditional income documentation as her income varies from month to month. She decides to apply for a bank statement loan to purchase a new home.

Sarah provides 24 months of bank statements to the lender, which show consistent deposits and a steady income. The lender assesses her credit score and debt-to-income ratio and determines that she is a good candidate for a loan. The lender offers Sarah a loan with a 5.5% interest rate, which is higher than traditional mortgages but still within her budget.

Sarah reviews and signs the loan agreement, and the lender disburses the funds to her designated account. She uses the loan to purchase her dream home and is able to make timely repayments based on the agreed terms.

Case Study 2: John, a small business owner

John is a small business owner who has been running his business for three years. His business is profitable, but he has difficulty providing traditional income documentation as he reinvests most of his profits back into the business. He decides to apply for a bank statement loan to expand his business operations.

John provides 24 months of bank statements to the lender, which show consistent deposits and a steady income. The lender assesses his credit score and debt-to-income ratio and determines that he is a good candidate for a loan. The lender offers John a loan with a 6.5% interest rate, which is higher than traditional mortgages but still within his budget.

John reviews and signs the loan agreement, and the lender disburses the funds directly to his business account. He uses the loan to purchase new equipment and expand his business operations. John is able to make timely repayments based on the agreed terms and is pleased with the success of his business.

Benefits of bank statement loans

Bank statement loans offer several benefits for self-employed individuals, small business owners, and entrepreneurs who may have difficulty providing traditional income documentation. These benefits include:

  1. Flexible income verification: Bank statement loans allow borrowers to use their bank statements as proof of income, providing flexibility for those who have varying income levels.
  2. Faster loan approval: Bank statement loans may have a faster approval process compared to traditional mortgages as lenders do not need to review and verify traditional income documentation.
  3. Alternative financing option: Bank statement loans provide an alternative financing option for those who may not meet traditional lending criteria.
  4. Customizable terms: Bank statement loans may have customizable terms to suit the borrower’s specific needs and financial situation.

Self-employed individuals often face challenges when it comes to obtaining traditional mortgages due to their income documentation requirements. However, bank statement loans offer an alternative financing option for self-employed borrowers.

Click here for various types of mortgage loans for the self employed:


Bank statement loans are also known as alternative income documentation loans, as they allow borrowers to use their bank statements as proof of income. These loans are often popular among self-employed individuals and small business owners, who may not have traditional income documentation such as W-2s or pay stubs.

The lender typically reviews the borrower’s bank statements for a specified period, such as 12 to 24 months, to determine their income level and stability. The lender may also consider other factors such as the borrower’s credit score and debt-to-income ratio when assessing their eligibility for the loan.

One of the benefits of bank statement loans is their flexibility in income verification. Self-employed individuals may have varying income levels and may not be able to provide traditional income documentation. Bank statement loans allow borrowers to use their bank statements as proof of income, which can provide more flexibility in the application process.

Another benefit of bank statement loans is their faster approval process. As the lender does not need to review and verify traditional income documentation, the loan approval process may be faster compared to traditional mortgages. This can be particularly beneficial for borrowers who need to secure financing quickly.

Case Study 3: Jane, a freelance writer

Jane is a freelance writer who has been working for herself for five years. She has a steady income from her writing projects, but she has difficulty providing traditional income documentation such as W-2s or pay stubs. She decides to apply for a bank statement loan to purchase a new home.

Jane provides 24 months of bank statements to the lender, which show consistent deposits and a steady income. The lender reviews her credit score and debt-to-income ratio and determines that she is eligible for a loan. The lender offers Jane a loan with a 5.5% interest rate, which is higher than traditional mortgages but still within her budget.

Jane reviews and signs the loan agreement, and the lender disburses the funds to her designated account. She uses the loan to purchase her new home and is able to make timely repayments based on the agreed terms.

Case Study 4: Mark, a real estate investor

Mark is a real estate investor who owns several rental properties. He has a steady rental income but has difficulty providing traditional income documentation due to his investment portfolio. He decides to apply for a bank statement loan to purchase a new rental property.

Mark provides 12 months of bank statements to the lender, which show consistent rental income deposits. The lender assesses his credit score and debt-to-income ratio and determines that he is eligible for a loan. The lender offers Mark a loan with a 6% interest rate, which is higher than traditional mortgages but still within his budget.

Mark reviews and signs the loan agreement, and the lender disburses the funds directly to his designated account. He uses the loan to purchase the new rental property and is able to make timely repayments based on the agreed terms.

Bank statement loans offer several benefits for self-employed individuals, small business owners, and real estate investors who may have difficulty providing traditional income documentation. These loans allow borrowers to use their bank statements as proof of income, providing flexibility and faster loan approval. While bank statement loans may have higher interest rates than traditional mortgages, they offer a viable solution for those who may not qualify for traditional financing options.

To apply for a bank statement loan, please click here:



Loans for the self employed provide an alternative financing option for self-employed individuals, small business owners, and entrepreneurs who may have difficulty providing traditional income documentation. These loans allow borrowers to use their bank statements as proof of income, providing flexibility and faster loan approval. While bank statement loans may have higher interest rates than traditional mortgages, they offer a viable solution for those who may not qualify for traditional financing options. It’s important to work with a reputable lender and review the loan terms carefully to ensure that the loan is within your budget and suits your specific needs.

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What is DSCR or Debt Service Coverage Loans?

People often ask if real estate investments are still the best way to grow wealth, especially with various other investment options like stocks, bonds, and cryptocurrencies. The short answer is YES.

Real estate investments offer steady income cash flow, especially when you have one or two rental properties under your name. Unfortunately, although this might sound very enticing, getting into the real estate rental business can be pretty challenging, especially if you’re a self-employed individual with no fixed/ steady income or even employer tax returns.

Fortunately, several loan programs are available to help self-employed individuals and real estate investors. One such loan program is a DSCR loan. This loan program provides real estate investors with the necessary capital to secure their dream rental properties without going through the stress of conventional loans.

What is a DSCR Loan?

When lenders provide investment capital to borrowers, they often need certain assurances or metrics to convince them that the borrower in question can pay off the loan. For family members borrowing from other family members or relatives, word of mouth is often enough to convince them.

Sadly, this is not enough for commercial lenders, irrespective of how trustworthy the borrower may be. DSCR, short for debt service coverage ratio, is a metric that commercial lenders use to assess the ability of a borrower to pay off a loan on a real estate rental property without verifying the borrower’s income.

This metric is obtained by dividing net operating income by the total debt service of the property.

Your net operating income = Total revenue from the rental property – operating expenses.

Total debt service = Debt obligation on the property, including principal and interest.

DSCR = Net operating income / Total debt service


Requirements to Qualify for a DSCR Loan Program

Unlike traditional bank loans, the requirements for a DSCR loan program are pretty flexible. Rather than demanding tax returns, proof of income, or other documents that commercial banks require, most DSCR lenders ask the borrower to provide a minimum of the following documents.

  • DSCR for the rental property
  • Credit score from 620 upwards
  • 20 to 25% down payment of the purchase price.

Nonetheless, it is essential to know that this requirement might vary across lenders, as different lenders might require one or more additional documents before processing the loan request.

How Does DSCR Affect My Ability to Qualify for a DSCR Loan?

To qualify for a DSCR loan, borrowers must have a good DSCR score. DSCR scores can be less than, equal to, or greater than 1. A good DSCR score is a score that is above 1, preferably equal to or greater than 1.25, though various lenders may require higher scores.

When evaluating loan eligibility for DSCR loans, lenders prefer individuals with higher scores of 1.5 or more as this gives the lender greater reassurance that the loan can be paid back comfortably.

Consequently, individuals with high DSCR scores enjoy lower interest rates than high-interest rates on scores of 1.25 or below. While scores equal to or less than one may not qualify for a loan with some lenders.

That is not to say that DSCR scores are the only factor lenders look at when determining interest rates. While the DSCR score might evaluate the borrower’s eligibility, factors like the amount of equity available, credit score, and coverage length of the loan might also play a significant part in determining the interest rates and the total amount of interest paid throughout the loan period.

Benefits of DCSR Loans

DSCR loans boast various benefits above traditional loans from commercial banks. Some of them include:

No tax returns hassles: Traditional lenders often require the borrower to provide proof of income, tax returns, bank statements, and other documents before they deem them eligible for a loan.

Unfortunately, most self-employed investors might not be able to provide these documents. Therefore, they turn to DSCR loans as a better alternative to provide them with the capital they need to secure their real estate investments.

No lengthy approval process: Even after providing these numerous and tedious documents, most traditional lenders still have to run various background checks and approvals before they finally approve a loan for an investor.

Sadly, time is money, and the real estate market waits for no one. DSCR lenders, on the other hand, provide loan approvals in as little as 24 hrs, giving investors the competitive advantage they need to thrive in the real estate market.

Higher loan limit: It’s no secret that most lenders have a somewhat limited cap on the amount of capital they provide to investors. They determine this cap by examining the borrower’s credit score and proof of income, which might not accurately represent their ability to repay the loan.

However, DSCR loans use the DSCR metric of the rental property and can provide loans of up to $5 million to real estate investors.

Lower down payment: Most traditional mortgage lenders require at least 20% equity on the investment before they provide investment capital to individuals. Unfortunately, most borrowers might not have that money and may be deemed ineligible for the loan.

DSCR loans have a lower down payment requirement that can be as low as 3%, depending on the lender. This makes it easier for investors to get the lifeline they need to grow their income.

Who Should Apply for a DSCR Loan?

DSCR loans are suitable for real estate investors and self-employed individuals without a steady income or employer’s tax return document. These individuals mostly fall under the following categories.

  • Doctors
  • Real Estate Investors
  • Business Owners
  • Self Employed Individuals
  • Lawyers
  • Freelancers
  • Consultants

Nevertheless, other individuals with steady incomes who want to avoid the hassles of traditional loans can apply for a DSCR loan as long as they have the minimum requirement stipulated by the lender.

Get a DSCR Loan Today!

As we’ve explained, getting a DSCR loan is much easier and more convenient than traditional loans. Therefore, it is most beneficial for self-employed individuals that want quick access to investment capital without having to provide income documentation.

So why settle for the tedious loans of traditional lenders when you can work with the best DSCR loan lender in the country. Check out our DSCR loan program and see why real estate investors turn to us for investment capital.

What is a Cash Out Refinance?

Paying for your dream home with a mortgage frees up your money for other things and builds your credit score and equity. You don’t have to wait years while repaying your current mortgage to convert your home equity into cash. You can pay off your existing mortgage through a cash out refinance and still have more money in your pocket.

What is a Cash Out Refinance?

A cash out refinance lets you take a larger loan and use it to clear your existing mortgage. After settling your old mortgage, the balance is refunded to you in cash.

You can use the cash for virtually any purpose, which includes consolidating high-interest debts, home remodeling, and even starting new construction.

Mortgage refinancing poses a lot of benefits to property owners. It enables you to reduce your monthly mortgage repayments while negotiating for a lower interest rate.

Besides, you can access the cash using your home equity, renegotiate your periodic loan terms, and include or remove borrowers from your loan obligation.

The amount of cash out refinancing you can obtain from your lender depends on your credit profile and the property’s loan-to-value ratio.

In most cases, you may incur more points, or a higher interest rate on a cash out refinance mortgage than on a rate-and-term refinance. Thus, if you want to benefit more from your cash out refinancing, find a way to lower the interest rate on the primary mortgage and maximize the funds you get.

How a Cash Out Refinance Works

With a cash out refinance mortgage, your home equity and some cash can serve as collateral for the new loan. The process involved is quite similar to rate-and-term mortgage refinancing. Although with rate-and-term refinancing, you only get the same amount to help you settle your existing loan at a lower interest rate.

You must find a lender willing to walk the journey with you when looking for a cash out refinance. The lender will then evaluate your credit profile, the existing mortgage’s terms, and the amount needed to settle the loan.

Depending on the underwriting analysis, the lender may decide to make an offer or decline your request. If you qualify for the new loan, you are awarded an amount that pays off the old mortgage, and the balance is issued to you in cash.

After a refinance, most lenders require you to keep about 10% to 20% equity. It depends on the lender and if you are paying for your new loan’s private mortgage insurance (PMI).

PMI is the additional cost you may incur if you fail to place at least 20% down when buying a house or the 20% equity required after a cash out refinance. The money covers the lender if you fail to pay your mortgage.

Like other loans, you are expected to pay closing costs after completing your cash out refinance. The charges range from 2% to 6% and cater to the appraisal, lender fees, and other expenses incurred. Thus, you must inquire about all the costs you will incur before borrowing.

How Much You Can Get from a Cash Out Refinance

To determine the amount you can receive from a cash out refinance, you should know these three things:

  • The worth of your home or home value.
  • Your current mortgage balances.
  • The percentage of retained equity required by the lender after refinancing.

Most lenders use an automated valuation model or physical home appraisal to determine the worth of your home. Depending on your credit score and the lender’s rules, you may be allowed to borrow up to 80% or 90% of your home’s value.

Now, the remaining 10% or 20% is your retained equity. The only exception is for the US Department of Veterans Affairs, which allows you to take all 100 percent equity.

For instance, if your home value is $600,000, the retained equity (20% of home value) will be $120,000. The cash out refinance loan amount you will be awarded will be $480,000. Let’s say your current mortgage balance is $200,000. The cash you will receive after repaying the balance will be $280,000.

Cash Out Refinancing Pros and Cons

Before you choose the cash out to refinance route, consider its pros and cons.


Lower Interest Rates – If your mortgage rates were higher when you initially bought the property, you might have lower interest rates in your cash out refinancing.

Access to More Funds – Cash out refinance can help you settle significant expenses, such as college tuition, home renovation, or any other financial goal.

Higher Credit Score – When you pay your credit cards through cash out refinance, you may improve your credit score by lowering your credit utilization ratio.

Debt Consolidation – Cash out Refinancing enables you to pay off all high-interest credit cards, saving you a lot of money.

Benefit from Tax Deductions – You may benefit from interest deduction during tax time. That’s if you will use these funds for a home improvement project that complies with the IRS eligibility requirements.

Lower Borrowing Cost – Cash out Refinancing options are usually cost-effective as their mortgage refinance rates are lower than personal loan rates.


Foreclosure Risk – Since you use your home as collateral, you may lose it if you fail to make the necessary payments. Things might be worse if you use the secured loan to pay unsecured debts, like college tuition and credit card debt.

Time-consuming – The entire process of getting a new loan takes time. If you need quick funds, cash refinancing may not work for you.

New Mortgage Terms – You will have to deal with different rules from your existing loan, such as interest rates and other fees.

Prolonged Debt Repayment – You may pay out cash to refinance your mortgage for decades. Most lenders spread the cash over 30 years. This could be costly and tiring, especially if you use the money to settle a higher credit card debt.

Private Mortgage Insurance (PMI) – Paying for private mortgage insurance (PMI) adds to your overall borrowing costs. Some lenders require you to keep between 10% to 20% equity, which covers them if you don’t pay the mortgage.

Closing Costs – Like any other refinance option, your cash out refinance lender will expect you to pay closing costs. This reduces the cash you get at closing.

If you are looking for a way to repay your current mortgage and still have some funds for other things, a cash out refinance would be the way to go. Look for a reputable lender and start your mortgage process. Remember to inquire about their interest rates and other fees involved before borrowing.

Global Events And Their Impact On Commercial Loans

According to the National Center for the Middle Market, a medium-sized business generates annual revenues between $10 million and $1 billion. These companies account for almost a third of the nation’s economy and employ 44.5 million people nationwide.

Because of regulatory restrictions, associated expenses, and the time needed to arrange cash, small and midsized enterprises cannot access financial and capital markets for funding. As a result, they acquire financial assistance such as commercial loans.

Commercial loans are considered a form of conditional funding for businesses. The cash allocated can help a company increase working capital, buy new equipment, build new infrastructure, and pay operational expenditures.

These are lending arrangements between financial entities and financial institutions, e.g., banks, to help with business growth. The loans can be short-term 3-month bank statement loans or long-term according to the requirements.

How Have Global Events Impacted Commercial Loans?

The world economy has undergone a rapid transformation in the past few years. Many factors such as political agreements, liberalization, and deregulation of the financial market have brought up more internationally integrated markets where companies, investors, and businesses have become more interconnected with each other at a global level.

Because of this, the correlated risks faced by banks, governments, corporations, and households might trigger a long-unseen financial chain reaction. Due to these associated global challenges and factors, the real estate industry has changed a lot.

Here is the impact of these global events and factors on the commercial real estate industry!

How Do Fuel Prices Affect Commercial Loans?

Inflation is frequently caused by rising gasoline prices, which impacts most industries. However, small enterprises suffer the most from the inflationary climate and price hikes.

Due to Billboard signs warning that gas now costs $4, $5, or even more than $6 a gallon in some locations, the increase in gasoline prices is both evident and affects consumer behavior.

Rising oil prices increase expenses and transportation costs for small businesses. Moreover, their ability to negotiate pricing with manufacturers or on to pass these inflationary expenses to their customers is also impacted.

High fuel prices affect businesses as they reduce consumers’ purchasing power. In addition, higher gas prices result in rising business costs, affecting customers and the global market.

Impact Of Interest Rates On Bank Statement Mortgage Loan

Bank statement mortgage loans do not require any other document for approval. Thus, these prove suitable for self-employed persons.

However, the interest rate may increase or decrease in accordance with substantive global events, such as the Russia-Ukraine war and the Pandemic.

Furthermore, higher interest rates make it difficult for home-based business owners and other smaller and medium-sized businesses to borrow. Bank statement mortgage loan lenders adopt interest rates as a precautionary measure due to the high-risk rate.

If the lender is satisfied with the provided information and feels low risk, they may keep the interest rate lower. On the contrary, they will also increase the interest rate if the chances of risk seem to be high. The risk rates are generally higher with bank statement loans, meaning the interest rates are also higher.

To pay low-interest rates on loans, you should better understand essential factors in determining interest rates. This way, you can figure out how to borrow efficiently.

Covid-19 And Its Effect On Commercial Landing

As we all know, a greater focus has been placed on the extent to which the country’s banks may offer financial assistance to impacted individuals and businesses due to the economic shocks that struck the global economy in the spring of 2020.

The changes in bank lending during the first few months of the outbreak have been vastly seen. During these months, significant domestic and foreign-affiliated banks dramatically boosted lending to firms.

Small local banks actively provide paycheck protection loans. These loans do not make the quantity of bank credit available to consumers, so the stock of residential mortgage loans held by banks did not change significantly.

Based on this experience, banks may need to plan and respond head-on to prevent such terrible situations in the future that may lead to foreclosures of affected enterprises.

Supply Chain Issues And Commercial Loans

Due to the situation in Ukraine, the already-existing supply chain problems are growing worse. Certain products are in higher demand, which makes it harder to produce, ship, and deliver them to consumers.

To put it simply, war makes it much more difficult for firms to make money and expand. Lenders may hesitate to offer financing due to declining revenues because they can’t make much profit when supply chain issues impact enterprises and consumers that avail services from them.

Key Takeaways

With everything happening worldwide,  we have encountered unprecedented shifts. The past two to three years have been riddled with uncertainties.

Therefore, it is crucial to understand how global events may affect the present and future of commercial loans. This knowledge will arm us to look for properties that are easily accessible and invest money where it will yield the best returns.

That said, Black Mortgage is providing the best bank statement mortgage loans with the lowest interest rates to help struggling businesses get back on their feet. For further information or mortgage quotes, contact us today.

Top 5 Loan Options You Would Need In 2022

Loans remain to be a powerful financial tool for growth. Whether it is to finance your personal needs or boost your small business, loans are there to help you achieve your goals. However, there are different types of loans applicable for different situations. Here are the top 5 loan options you would need in 2022, offered by mortgage broker Phoenix AZ institutions.

Personal Loan

This is money borrowed from private lenders, credit unions, or banks that must be paid back in monthly installments for two to seven years. These usually do not require collateral since they are unsecured.

As a borrower, your income, debt, and credit profile will be considered before getting approved. Additionally, you must pay the installments on time to prevent penalties and avoid hits on your credit score.

Your chances of getting approved increase when used for something reasonable such as; financing, increasing your financial standing, home improvement, debt consolidation, and more.

Personal loans are advantageous because no tax returns or pay stubs are necessary. These are also available in higher loan limits and may be used in virtually anything – home improvement, purchasing second homes, and other investments.

However, personal loans have their share of disadvantages. These may have higher interest rates, so it helps to check if the interest rate is something you could manage. Additionally, personal loans may not be offered by all lenders.

Bank Statement Loan

Bank statement loans allow you to be qualified based on your bank statements instead of your tax returns. It is an excellent choice for self-employed people or those who do not have income that can be traditionally documented.

Bank statement loans are non-qualified mortgages which means that these do not qualify for the standards for conventional loans. As such, these loans are less regulated, and you might not get the typical consumer protection offered with other loan types.

However, not all lenders offer bank statement loans, and these loans often come with a high mortgage rate. Do not be discouraged because there are many ways to secure a good deal, although it may take more effort than other loans. Reach out to the mortgage lenders you are interested in and inquire about their lending requirements. Just make sure to compare different companies to get the best offer.

Interest Rate Reduction Refinance Loan

An interest rate reduction refinances loan is an excellent choice if you have a VA-backed home loan and you wish to lower your monthly mortgage. This is also helpful for making your payments more manageable and stable.

To be eligible, you must have a preexisting VA-backed home loan, and you are applying with the intent to refinance this loan. Additionally, you must provide proof of residence in the area covered by this loan.

To find a lender, the first step is to approach a lender that offers IRRRL. This includes a mortgage company, a private bank, or a credit union. It helps to review, compare, and contrast different companies to be made aware of your options.

Next, provide the necessary information required by the lender. You may take the Certificate of Eligibility from your original VA-backed home loan or have the lender request it electronically through the VA Home Loan portal.

Lastly, follow through with the instructions from the lender on how to close the IRRRL loan and pay your closing fees. You may need to place a down payment which will help lower the loan costs.

Home Equity Loan

A home equity loan is also known as an equity loan or home installment loan. This type of consumer debt allows homeowners to take out a loan against their home equity. The amount is determined based on the difference between your mortgage balance and the current market value of your home.

There are two main types of home equity loans: fixed-rate loans and home equity lines of credit. A fixed-rate loan is a type of loan with an interest rate that remains unchanged in the long term. Borrowers prefer this for long-term loans since they can be protected against inflation.

Home equity lines of credit can be compared to a credit card in which you can spend up to your credit line maximum. You only need to pay off what you spent. This usually spans thirty years, wherein you have a 10-year period to spend and 20 years to pay back what you spent.

Small Business Loans

A small business loan is the best type of loan for small enterprises looking for expansion or financing. This allows small businesses to gain capital without losing equity. It kickstarts and allows them to remain in control.  

Think of small business loans as a way to access capital for your business. It can also be used for improvements, technological advancements, renovations, staffing, acquisitions, real estate expansion, and more.

The lender or bank will first assess your business and gauge the amount of debt you can afford before granting the loan. Additionally, other factors such as the condition of the business, availability of collateral, character, and income will be considered.

Small business loans can be further divided into SBA 7(a) loans, SBA 504 loans, conventional loans, and business lines of credit. As a borrower, it is up to you to assess which type of loan best suits your needs. It helps to compare various lenders’ offers since terms, qualifications, and rates may vary.

Make sure to approach your mortgage broker, Phoenix AZ options, and inquire about loan options that best fit your needs.