Minimum Credit Score Requirements To Qualify For A Mortgage
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.
Getting Pre-Approved With a Mortgage Lender With No Overlays
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 that Gustan Cho Associates has no lender overlays during the coronavirus pandemic. Gustan Cho Associates just goes off the AUS FINDINGS with no additional lender overlays on government and conventional loans.
Issues When Buying A Home In A Sellers Market With Bad Credit
The housing market is booming. This holds true even though the economy is recovering from the coronavirus pandemic. Over 50 million Americans have filed for unemployment during the COVID-19 outbreak. Unemployment rates have been recovering since their peak numbers a few months ago. The unemployment rate has fallen under 10%.
This is a great sign the economy is headed on the right track. The coronavirus outbreak in the U.S. has alarmed investors in the secondary mortgage bond markets where investors do not have an appetite to purchase mortgages from lower credit score borrowers. This has forced many lenders to increase credit score requirements for their borrowers. This creates a problem for homebuyers with bad credit and lower credit scores.
Buying A Home With Bad Credit
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.
Mortgage Lenders For Bad Credit And No Overlays
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. Gustan Cho Associates 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 that 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 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.
How To Avoid Delays In The Mortgage Process
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
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 real estate agent is your negotiator and represents you. Their job is to convince you that you are the right buyer in a seller’s market.
Key in Getting The Winning Bid in Seller’s Market With Multiple-Offers
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 Solid 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.
What Will Get You The Winning Bid In a 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 the contingencies listed on the home purchase offer.
Michelle McCue 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?
Have The Winning Edge When Buying A Home In A Sellers Market With Bad Credit
The key when buying a house in a sellers market with bad credit is having the winning edge over the competition. 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.
Mortgage lenders for bad credit like Gustan Cho Associates 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
Buying A Home In A Sellers Market With Bad Credit With The Winning Bid
Wendy of Gustan Cho Associates recommends giving up on concessions to get the winning bid in a hot seller’s market for homebuyers with bad credit. Wendy 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.