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Understanding Mortgages
the 4 C’s

When seeking a mortgage for either refinancing or a home purchase, the goal is to get the best rate, the lowest upfront costs, and the best service possible. However, just filling out the application can be a daunting task.  Understanding the process can be even more confusing. To understand the process lets look at a mortgage the way a bank does. 

The bank’s first MAJOR concern is to be sure it gets paid back. The bank’s second MAJOR concern is that there is enough value to recapture most, if not all, of their investment, in the event that they must take back a piece of property.  Please understand that the bank does not want your house - they are in the money business, not the real estate business. When a foreclosure occurs, EVERYONE, including the bank, loses money. 

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To determine if a borrower is an acceptable risk or not, the bank has 
four areas of concern.  We at Mortgage Corporation call them The 4 C’s: 

  
Capital - Does the borrower have money for the down payment or for reserves?

Collateral - Is the property worth the money?  Just as important, in the event of default, is it a property that can be sold with ease?

Capacity - Does the borrower earn a good income?  Can his or her current level of income handle all of the bills along with a new mortgage payment?

Credit  - What is the borrower’s track record on paying his obligations and commitments?  This is reported by the credit bureaus in the form of a credit score. 

To satisfy the 4 C’s, the lender requests information from other parties in order to substantiate the claims made by the borrower. For example, information may be requested from the employer, the bank in which the borrower does business, an appraiser, credit bureaus, etc.

One of the keys to obtaining an excellent interest loan rate is being able to document income, assets, and credit history.  Unfortunately, some people such as waitstaff, performers, trades people, and those self-employed frequently cannot provide paycheck stubs that accurately portray their real earnings.  Still other people have blemishes on their credit report that may impair their ability to obtain the most favorable rate.   

The local bank or investor has one, maybe two sets of guidelines to work with. If you do not fit into their underwriting “box” they cannot grant you a loan.  This is where your Mortgage Corporation loan officer will be of service to you.   We have access to hundreds of lenders with thousands of different guidelines to work with.  For example, one lender might not accept business bank statements to prove income, whereas another lender would.  

Mortgage Corporation will provide you with: 
THE RIGHT MORTGAGE with the RIGHT TERMS from the RIGHT LENDER.

What distinguishes Mortgage Corporation from our competition is our attention to detail for what our clients’ goals and needs are, and being able to match them up with the proper lender.  Please contact us today.