Buying A Home In A Sellers Market With Bad Credit

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This ARTICLE In Buying A Home In A Sellers Market With Bad Credit Was Published On October 3rd, 2020

Buying A Home In A Sellers Market With Bad Credit is finding a lender with no lender overlays.

  • Buying A Home In A Sellers Market With Bad Credit can be challenging during these times with COVID-19 spreading
  • Most lenders have tightened up credit standards and requirements
  • Most lenders have increased their minimum credit score requirements and increased lender overlays on just about everything during the coronavirus pandemic
  • Lenders who had a minimum credit score requirement of 580 on FHA loans have increased them to over 640 FICO
  • Some lenders have even increased them to over 680 FICO
  • VA loans have no minimum credit score requirements as long as the borrower has an automated underwriting system approval (AUS)
  • However, most lenders have a 640 or high credit score requirement on VA loans
  • The great news is Gustan Cho Associates has no lender overlays during the coronavirus pandemic
  • GCA Mortgage Group just go off the AUS FINDINGS with no additional lender overlays on government and conventional loans

In this article, we will discuss and cover Buying A Home In A Sellers Market With Bad Credit.

The Major Issue Facing Buyers When Buying A Home In A Sellers Market With Bad Credit

Buying A Home In A Sellers Market

The housing market is booming. This holds true even though the economy is recovering from the coronavirus pandemic.

  • Over 50 million Americans have filed unemployment during the COVID-19 outbreak
  • Unemployment rates have been recovering since its peak numbers a few months ago
  • The unemployment rate has fallen under 10%
  • This is a great sign the economy is headed towards the right track
  • The coronavirus outbreak in the U.S. has alarmed investors of the secondary mortgage bond markets where investors do not have an appetite to purchase mortgages of lower credit score borrowers
  • This has forced many lenders to increase credit score requirements from their borrowers
  • This creates a problem for homebuyers with bad credit and lower credit scores
  • The major issue facing buyers when Buying A Home In A Sellers Market with bad credit is most lenders have increased their lender overlays on credit scores and borrowers with bad credit
  • It is more difficult for borrowers with lower credit scores to qualify for a mortgage during the coronavirus pandemic
  • The housing market is booming nationwide
  • There is more demand for housing than inventory
  • The hot housing market and demand for housing often create hurdles for homebuyers with bad credit
  • The key is to find a lender who has no lender overlays such as the team at Gustan Cho Associates

GCA Mortgage Group has no lender overlays on government and conventional loans during the coronavirus outbreak. We just go off the automated underwriting system findings (AUS) and have no additional lender overlays.

The Mortgage Process For Borrowers With Bad Credit

Most mortgage companies who have no lender overlays have been flooded with business and are often at full capacity.

  • What he means to the borrower is the mortgage process is longer than what it used to be
  • Turnaround times can be longer
  • The loan officer, the mortgage processor, and the borrower all need to work together and make sure all documents are complete
  • There is no room for errors
  • If the underwriter sees a missing document, the file will get kicked back which could mean a one week or longer delay
  • Lenders with no overlays are swamped with business
  • Most turnaround times from the time the file is submitted to a clear close can be 45 to 60 days
  • This longer than usual mortgage process can often become an  issue in a hot housing market
  • Sellers can want to close as soon as possible during a hot housing market

We will discuss and cover how homebuyers with bad credit can overcome getting the winning bid during the coronavirus outbreak.

Hiring The Right Realtor When Buying A Home In A Sellers Market With Bad Credit

The key when Buying A Home In A Sellers Market with bad credit is hiring the right real estate agent.

  • Not all real estate agents are created equal
  • The realtor is your spokesperson
  • The realtor is your negotiator and represents you
  • Their job is to convince that you are the right buyer in a seller’s market
  • Homes sell fast in a seller’s market
  • Multiple offers are common
  • Experienced real estate agents are on top of their marketplace
  • Many go-getter realtors know homes that are about to hit the market
  • An experienced veteran realtor knows exactly what price the homebuyer should offer

An experienced real estate agent will guide homebuyers from the time the buyers put an offer to closing.

The Importance Of A Mortgage Pre-Approval

The pre-approval process is the most important stage of the overall mortgage process.

  • The number one reason for stress during the mortgage process and/or a last-minute mortgage loan denial is due to the loan officer not properly qualifying the borrower
  • The loan officer should thoroughly review the borrowers’ loan application, credit report, AUS FINDINGS, and important documents such as income tax returns, W2s, paycheck stubs, bank statements, and public records
  • Having a rock-solid pre-approval is hands down the most important stage of the overall home buying process during a hot sellers housing market

It is the realtor’s job to relay the message and convince the seller’s side that the buyers have a rock-solid pre-approval.

The Key To Getting The Winning Bid On A Home Purchase Offer During A Sellers Market

What is the key to getting a winning home purchase offer in the sellers market

Offering the highest price does not always get you the winning bid on a home.

  • There are other considerations other than price that is more important to home sellers
  • One of the important factors in getting the winning bid is contingencies listed on the home purchase offer
Mike Richardson, a partner at Capital Lending Network, Inc. based in Redding, California is an expert licensed loan officer and an associate contributing editor at Gustan Cho Associates, said the following:
Contingencies are anything the buyer needs to happen for the transaction to move forward. Typically, there are contingencies around securing a mortgage, getting a satisfactory appraisal, and doing inspections.  If anyone of those things falls through or does not occur, you have the option to walk away from buying the home with your earnest money deposit, or the “good faith deposit” that you gave the seller when you first submitted the offer on the property, in hand. From the seller’s perspective, offers with contingencies are less than ideal. Obviously, the fewer chances that you have to walk away from buying the home, the more secure the seller will feel. That said, as the buyer, you have the option to waive some of your contingencies to make your offer more competitive. You’ll want to proceed with caution, though. Once you waive contingencies, you agree to accept the home, even if something falls through. This could mean taking the home in as-is condition, even if the inspector finds big issues during the home inspection or even being responsible for buying the home if you’re unable to secure a mortgage. With that in mind, it’s important to make sure you truly understand what each contingency means so that you’re aware of the risks that waiving each one entails.

Mike Richardson said home sellers are more concerned about not having any stress during the home selling process than getting the highest bid on their home. What good is it having the highest price for your home if it does not close?

Other Factors That Gives Buyers The Winning Edge When Buying A Home In A Sellers Market With Bad Credit

Expect a longer closing time if you are a home buyer with bad credit.

  • It is not because there is more work for borrowers with bad credit
  • It is mainly because lenders with no lender overlays are just slammed during the coronavirus pandemic
  • Most lenders have implemented tons of lender overlays during the pandemic
  • However, lenders like Gustan Cho Associates and Capital Lending Network have ZERO lender overlays on government and conventional loans during the COVID-19 crisis
  • Due to high capacity and volume, lenders with no lender overlays generally have longer turnaround times than mortgage companies with higher lending requirements and lender overlays

Tammy Trainor the operations manager at Capital Lending Network, Inc. (CLN) recommends giving up on concessions to get the winning bid in a hot seller’s market for homebuyers with bad credit. Tammy Trainor said the following:

Finally, be prepared to make some concessions, especially when it comes to small details such as the settlement date. Again, these details are points of negotiation and showing that you’re willing to be flexible may put your offer over the top in the seller’s eyes. The best thing you can do is have your agent call the listing agent and ask if there are any particular transaction details that are important to the seller. Then, if at all possible, make sure to work those details into your offer. You could even offer to pay some of the seller’s closing costs. Taking some cost burden off the seller’s plate would make your offer even more attractive.
Buying a home in a seller’s market with bad credit is definitely possible. This also holds true during the coronavirus outbreak. Not all lenders have tightened up lending standards and added lender overlays. The team at GCA Mortgage Group is still helping homebuyers with bad credit and lower credit scores. Gustan Cho Associates has no lender overlays on government and conventional loans.  If you are a home buyer with bad credit in a seller’s market and need a lender with no lender overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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