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home staging for profit, staging homes business training
home staging, staging homes for profit, home staging business training

Three Essential Parts of a Loan

by Barbara Jennings, CRS/CSS

Whether you're looking for a business loan for your home staging or interior redesign business or a home loan to purchase a home, condo or building, there are some common denominators that banks and lenders use to determine your credit worthiness and their risk factors.

Every loan you might apply for is based upon some calculation of risk. The degree of risk that the lender determines you have will play a part in determining what kind of return they can expect to get. In every asset based loan, there are three major categories in determining the risk.

  1. Cash Flow
  2. Collateral
  3. Credit

When these three factors are combined, a lender will determine what rate and terms to offer you. Here, briefly, is a discussion of what each of them mean.

Cash Flow

Cash flow is the amount of money you are regularly generating and how you can document it. If you are a salaried employee, you can document your income with your W-2 or a pay stub or copies of actual paychecks. Lenders use the gross wages to determine your income, not your net earnings. Using pay stubs or a W-2 to document your earnings is referred to as "Full-Doc" (Full Income Documentation). If you don't use these documents to prove income it is said to be a "stated income" loan.

After you establish your gross income, you have to itemize your monthly fixed expenditures, like rent or mortgage payment, credit card bills, utilities, car payments and the like. Once you have this total, your income and expenditures totals will be used to calculate how much of a loan you "qualify" to get.

Depending on who your lender is, there are two ratios to be considered. The front end ratio is the amount of your new monthly mortgage payment divided by the monthly income. If you are an "A" lendee (someone whose credit score is above 700), the lender will use a front ratio of 33%. If you earn $9,000 per month, for example, you could qualify for a total payment of $2,970 (including property taxes and insurance).

The "back end" calculation uses the amount of your new mortgage along with the total amount of your fixed expenditures or obligations. On the "back end" ratio, you need to have a ratio of no more than 40%. On this formula, the borrower could have no more than $630 per month as fixed payments to be compliant. Naturally, if you are not an "A" borrower, the qualifications are tougher and any terms offered will be tougher as well.

Mortgage Loans (continued)


Barbara Jennings, is a leading home staging and interior redesign trainer. Author of 9 books on decorating, she is one of America's leading experts on how to start, manage and grow a home staging or interior redesign business.

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ANNOUNCING! HOME STAGING FOR YOURSELF! PRE-SALE

home staging for yourself

At last the perfect check list for staging your home. This brand new 80-page guide is so comprehensive, it will virtually leave no stone unturned in its quest to help you completely stage your home to sell for the highest price possible in the shortest time possible.

Developed for the homeowner as well as the professional stager, this professional check list guide is exhaustive, helping anyone to tackle the awesome job of determining what needs to be done to prepare a property for sale, and do it in a logical sequence that makes total sense.

No long dissertation on how to do it, it just give you in bulleted, outline format the "to do" list for every spot in your home, beginning at the curb and ending in the back yard and every place in between. You'll love it. So easy to use. So thorough.

If you're a stager, use the Guide to help you in your consultations. If you have a homeowner who insists on doing all the work themselves, give them the Guide as part of your consultation service, or sell it to them as an additional value-added product to augment your consultation. Absorb the cost as part of your consultation fee, or pass it on to your client.

If you're a homeowner and aren't working with a stager, use the Guide as your personal, custom guide for preparing your own home for sale. If you then decide to hire a stager, give them the guide with your personal notations included so that you make sure they do every task you have circled in the outline or detailed in the notation places.

The Guides are currently in transit and will be available as soon as they arrive. We expect an early run on them, so get yours immediately, as we may run out. Homeowners can purchase a single copy to assist them; professional stagers can buy them at a discounted price in small quantities.

For more details, visit: Home Staging for Yourself