Buying Home Without Solid Pre-Approval And AUS Findings

Buying Home Without Solid Pre-Approval And AUS Findings

This BLOG On Buying Home Without Solid Pre-Approval And AUS Findings Was UPDATED On December 17th, 2018

Buying Home Without Solid Pre-Approval and without Automated Underwriting System findings can be a recipe for disaster.

  • For example, home buyers who have a prior Chapter 7 bankruptcy, there is a two year waiting period for FHA and VA Loans before being eligible of an automated approval by Fannie Mae’s Automated Underwriting System
  • Home Buyers with a prior foreclosure, deed in lieu of foreclosure, or short sale, there is a mandatory waiting period of 3 years to be eligible for a FHA loan via Fannie Mae’s Automated Underwriting System
  • Home Buyers with a deed in lieu of foreclosure or a short sale are eligible for an automated approval via Fannie Mae’s Automated Underwriting System for a conventional loan after 4 years
  • Many home buyers get antsy and start looking for a home about six months or earlier prior to their waiting period is over and without an approve/eligible per AUS assuming that once the waiting period is over, they are all set
  • Buying Home Without Solid Pre-Approval prior to waiting period being over is risky
  • Shopping for home is fine but entering into a purchase contract can be a risky move
  • Most sellers will want to close on the sale of their home no later than two months from the date they enter into a purchase contract
  • The problem this creates is that lenders cannot work on mortgage application without an automated approval from Fannie Mae’s Automated Underwriting System
  • On another note, just because the waiting period has passed does not mean borrowers are guaranteed an automated approval

Automated Underwriting System

Borrowers should not automatically assume they will get a guaranteed automated approval via Fannie Mae’s Automated Underwriting System just because passing the waiting period requirements.

  • The Automated Underwriting System is a sophisticated computer system that will take into effect borrowers following data:
    • income, debts
    • liabilities
    • credit scores
    • credit pattern from the date of bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • The Automated Underwriting System will especially pay special attention to see whether borrowers have established credit trade lines for at least a year
  • Will watch for late payments after bankruptcy and/or foreclosure
  • It will analyze all information stated on mortgage application before it renders an automated approval

Make Sure To Have Iron Clad Purchase Real Estate Contract

Home Buyers  entering into a real estate purchase contract should have an iron clad real estate contract. Contract should have contingencies where they can get their earnest money back in the event of a mortgage denial.

  • It will be up to home buyers whether or not to hire home inspectors, pest inspectors, or other specialty inspectors prior to automated approval
  • Home Buyers need to realize that mortgage application will remain in idle mode until waiting period has elapsed

Related> Automated Underwriting System: Case Scenario

Related> Automated Underwriting System

Related> Difference Between Fannie Mae And Freddie Mac

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