Mike sat down with lender Stacy Wolak from INB (NMLS #689948) to talk about how buyers can get started with the home loan process. Below the recording is a transcript of the conversation.
[00:00:00.000] – Mike
I am here with Stacey Wolak from INB. Stacey is a lender. Stacey and I work together quite a bit. Now, you also… INB might not be a household name, but INB is a local bank.
[00:00:15.640] – Stacy Wolak
Yeah. We’ve been around for over 15 years here in Peoria. We’re right on Knoxville. I’ve been with INB for seven years in the business 24. INB has just been incredible support in the community. That’s why I like working at a bank because my customers can call me afterwards and I can help them with any questions they have and be there to help them. We can remove PMI with an email and a conversation. We can talk about their escrow payment and when your taxes or insurance change each year and your payment adjusts, we can talk about those things. That’s what I like.
[00:00:53.080] – Mike
As far as the process for somebody, I know that somebody can go to INB’s website and you have a link on there where somebody can, potential buyer can go and fill out an online… It’s not an application, but… Or is it? Okay, so it is an application. And then what would happen from there?
[00:01:17.060] – Stacy Wolak
Sure. So say someone calls me or texts me and they are ready to get pre qualified. I do like to have a conversation first because we don’t know where we’re going or what we’re doing yet. And so I love to talk to people first for a few minutes. And then I can text a link, I can email a link, they can go to our website. We can just do it over the phone. Sometimes it’s just nice to have that phone call and to get to know each other a little bit more and to go through all the necessary information. And of course, we can email the link too. And you can do it in person or Zoom or FaceTime. There’s so many options these days. It’s fun. So you just never know. But however that person needs is what we can do. And so that’s what I love is just getting to know different people’s needs and wants, where we’re going, what we’re doing. It’s interesting that always I wonder, Well, how much can I get pre qualified for? And so I always take a step backwards. Well, how much do you want your payment to be?
[00:02:20.980] – Stacy Wolak
Because the purchase price doesn’t really matter. It matters what your monthly payment is. Sure. How much are you going to pay? Because I can’t pay that for you. And it’s different. It’s different for everyone. It’s different based on down payment. But sometimes, too, we have buyers who are like, Well, can’t I just put down $1,000 more and then I can go higher? What happens as we increase our purchase price. What else goes up? The taxes go up. The homeowner’s insurance goes up. So is it just as easy as I’m just going to throw another $10,000 down because I went $10,000 higher. Not if you’re at your max debt to income ratio. It’s not that easy. So those are conversations we need to have.
[00:03:04.360] – Mike
So in terms of factors that would go into a bank’s ability to give somebody a loan, there’s certainly what you make versus what you owe, that debt to income ratio that you just talked about. What does a bank look for as far as those guidelines, as far as like, Okay, you make this but you have X number in. Is there a percentage that banks will say, no, that’s too high?
[00:03:33.370] – Stacy Wolak
Typically, so it depends. Depends is always going to be a big word. So if you have excellent credit, then you’ll see the ability to go up to 50%. That’s debt to income ratio.
[00:03:46.760] – Mike
That would freak me out.
[00:03:48.550] – Stacy Wolak
Right. But that’s your gross income. So we’re not looking at net, we’re not looking at after taxes, we’re looking at gross. So that is something to think about. But a lot of people are wanting to push that line. But your average is more the 45 %. So typical is 45 % debt to income ratio. That can be strict with conventional. Different loans, they have different types of… So I’m talking about conventional here. And then sometimes, like other programs like a USDA, they can even be lower, like 41%. So it’s going to depend. It’s going to depend on the strength of the buyer. Credit scores is your ultimate strength. It is your superhero. If you’ve got good credit, then you’re going to be able to do a lot more because it’s going to lower your insurance. It’s going to lower your interest rate, lower your PMI if you have it. So that’s really a big factor. And then you’re looking at… People think we look at balances, and it’s not balances we look at, we look at payments. So one of the challenges that we have right now is all the student loan debt that’s all at zero.
[00:04:59.460] – Stacy Wolak
But what that pushes lenders into doing is we have to calculate a payment because your payment won’t be zero forever. Now, if you can prove that, okay, then we can have a different conversation. You’ve got something from the student loan saying it’s going to be zero for this period of time. But otherwise, we as a lender actually have to use 1 % or 0.5 % of the balance. So you got a $30,000 student loan payment. We now have a $300 monthly payment that just got added to your debt ratio. Do you still qualify? So those are the things that we might have to look at, too.
[00:05:41.740] – Mike
Interesting. I think there’s a misconception out there about the difference, especially because we’re coming back into a fairly competitive market like we had last year. Can you explain the difference between a prequalification and a pre approval? Because I think the terms get interchanged and misused quite a bit. So will you add some clarity to that?
[00:06:06.780] – Stacy Wolak
Sure. So typically a prequalification is that phone call or that online app, and we’re getting the application. You’ve plugged in your information, where you work, how long you’ve been there, how much you make, and your assets. And then as a vendor, we literally just run it through a system. We run it through a computer that says yes or no. And that’s a prequalification. We haven’t verified, we haven’t looked at pay stubs, we haven’t collected any W2s or bank statements. And so that’s us going by your word. And you don’t know. But a pre approval, then we’re looking at the pay stubs. Does the pay stub hourly amount and the hourly wage match up to the dollar amount on loan application? Does the bank statement show the assets that are listed on the loan application? Because that can be a make or break for some people. I have some people who round up. I have some people who round down. I have some people who put their yearly and their monthly. So that’s why we have to go back and we have to have those conversations. Let’s talk about this, let’s clarify, let’s understand is this bonus income, maybe it doesn’t match up.
[00:07:23.870] – Stacy Wolak
Is there child support in there? Child support, alimony are these numbers that are factored in. Sometimes we’ll get a pay stub and all of a sudden we didn’t know about child support. And those are questions that we all have to have and be open and honest about the whole picture.
[00:07:41.380] – Mike
That makes a lot of sense. Prequalification is a drive by look at somebody’s finances and assets, whereas a pre approval is a fully underwritten or fully checked verification that the audio matches the video.
[00:08:01.340] – Stacy Wolak
Right.
[00:08:01.410] – Mike
Awesome. That makes a lot of sense. You’re somebody who does a lot in the community. What are some of the things that you’re working on right now that are passionate or that you are finding passion in?
[00:08:16.020] – Stacy Wolak
Right now, my husband and I are Big Brothers, Big Sisters. So that’s super fun. We have our little that we get to be with once or twice a month. And then actually working on granting a wish for Make A Wish Illinois with our friend Melissa.
[00:08:32.780] – Mike
That’s awesome.
[00:08:34.860] – Stacy Wolak
Make A Wish has been on my heart for a long time. And then, of course, we got to be at Midwest Food Bank, which is an incredible thing, too. So it’s just packing up some food and doing these simple things, but coming together as a community and making a big splash in the US or in our backyard and making a difference is what’s so much fun.
[00:08:58.540] – Mike
Absolutely. I will also link in the video to Make A Wish Illinois as well as Midwest Food Bank. Well, Stacy, thanks so much. I really appreciate you sitting down and talking with me. And this was all really useful information. How does somebody get a hold of you, Stacy?
[00:09:18.240] – Stacy Wolak
Best way is my cell phone, 3093031542, and happy to chat anytime. I’m more of an educator than a salesman, so my rule is the only dumb questions are the ones we don’t ask, right?
[00:09:30.869] – Mike
That’s great.
[00:09:30.860] – Stacy Wolak
Because we don’t know what we don’t know. Ask away, that’s what I’m here for is just to help walk alongside, answer questions and continue to learn and grow together.
[00:09:42.620] – Mike
That’s awesome.