Choosing A Lender With No Mortgage Investor Overlays

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This BLOG On Choosing A Lender With No Mortgage Investor Overlays Was UPDATED And PUBLISHED On August 21st, 2018

Choosing A Lender
Gustan Cho Associates Mortgage Group

Choosing A Lender Who Is Right For You

Once deciding on becoming a homeowner and start the home buying process , one of the most decisions to make will need to make is choosing a lender.

  • Not all lenders have the same mortgage guidelines on FHA, VA, USDA, nor conventional loans
  • A home buyer can get denied by one lender and get approved with a different lender
  • Most lenders have mortgage investor overlays
  • Overlays are additional mortgage requirements that are above and beyond of agency guidelines
  • For example, FHA requires 580 minimum credit scores to qualify for FHA Loans
  • However, most lenders may have overlays on credit scores where they require 620 to 640 credit scores on FHA Loans
  • The U.S. Department of Veteran Affairs does not have minimum credit score requirements on VA Loans
  • However, most lenders will require 620 to 640 credit scores on VA Loans
  • VA does not have any debt to income ratio requirements
  • Again, most lenders have overlays on VA DTI where they require 45% to 50% debt to income ratios

In this article, we will cover and discuss Choosing A Lender With No Mortgage Investor Overlays.

Avoiding Stress By Choosing A Lender With No Mortgage Investor Overlays

How Avoiding Stress By Choosing A Lender With No Mortgage Investor Overlays

Choosing a lender home buyers to feel comfortable working with throughout the mortgage process is extremely important and will not stress borrowers:

  • The mortgage process will be stressful for many
  • This is especially when a mortgage underwriter will knit pick on a file and ask condition after condition
  • Or when the borrower provides all the list of conditions on the conditional loan approval and the mortgage underwriter will come back with another batch of conditions

Choosing a lender where borrowers feel comfortable to work with is no different than choosing a doctor, accountant, insurance agent, attorney, realtor, or other business professionals.

Referrals By Realtors And Friends In Choosing A Lender

what are the Referrals By Realtors And Friends In Choosing A Lender

Most home buyers will ask family, friends, or real estate agents in their journey in choosing a lender.

  • This is a great start
  • Some home buyers may have friends, family, or relatives who are loan officers
  • Some may choose their lender from ads on television, radio, fliers, or newspapers
  • Others who are very private want to do their own search in choosing a lender
  • Many may go to their local bank to see if they qualify for a home loan
  • However, a large percentage of home buyers will search the internet for lenders
  • Choosing A Lender who borrowers can get along with is extremely important

However, choosing a lender who specializes in income and credit profile is more important.

Choosing A Lender Who Specializes With Borrowers Credit/Income Profile

How to choose a lender who specializes in the borrower's credit / income profile

Not everyone has 800 credit scores, perfect payment history, 20% down payment, and low debt to income ratios.

  • Borrowers with highest credit scores and excellent income with a substantial down payment can go anywhere and get the best terms and rates
  • Unfortunately, that is not how the real world works
  • Many hard-working Americans have had patches in their lives

They had periods of bad credit such as the following:

  • have outstanding unpaid collection accounts
  • bankruptcy
  • foreclosure or multiple foreclosures
  • deed in lieu of foreclosure
  • short sale
  • charge off accounts
  • late payment history
  • little or no down payment and/closing costs
  • gaps in employment
  • self-employed with little or no documented income
  • other credit and income issues where not all lenders can help them

Not All Lenders Have Same Loan Requirements

Not All Lenders Have Same Loan Requirements

One important thing home buyers need to realize is that not all lenders have the same lending requirements agency loan programs.

  • For example, not all lenders will have the same FHA requirements
  • Most FHA mortgage lenders will have FHA Lender Overlays
  • Overlays are additional lending requirements on top of the minimum FHA Guidelines that is set by the Federal Housing Administration
  • For example, to qualify for 3.5% down payment home purchase, FHA requires a minimum credit score of 580
  • However, most banks require  640 Credit Scores to qualify for FHA Loans
  • This is called an FHA Overlay On Credit Scores
  • The lender requires a higher credit score than the minimum credit score requirements by FHA
  • Same with debt to income ratios
  • FHA allows up to 56.9% DTI for borrowers with at least 620 Credit Scores
  • However, many banks and mortgage companies have DTI Overlays
  • They require debt to income ratios are capped at 45% DTI

This is even though FHA minimum debt to income ratio caps is at 56.9% DTI.

Choosing A Lender With No Overlays On Debt To Income Ratios

how to choose a lender without a debt / income ratio

Home Buyers who have credit or income issues should do their own evaluation and seek out lenders who specialize in bad credit mortgage loans:

For example, here is a case scenario:

  • high debt to income ratio borrowers
  • lenders borrowers consulted with have overlays on debt to income ratios
  • borrowers can Google ” Mortgage Lenders With No Overlays On Debt To Income Ratios” 
  • list of mortgage lenders will appear
  • but how many lenders have no DTI Overlays
  • make sure to question loan officer they have no overlays

Choosing A Lender With No Overlays On Credit Scores

How do you choose a loan provider without credit scores?

Same with low credit scores:

  • Borrowers credit scores under 600 will have a difficult time choosing a lender with no overlays on credit scores
  • Most mortgage lenders have overlays on credit scores
  • Try to Google ” Mortgage Lenders With Under 600 Credit Scores” 
  • List of mortgage loan officers and mortgage companies will show up but how many of them do not have overlays on credit scores
  • Start interviewing lenders that can assist with credit and financial profile

Choose lender borrowers feel most comfortable with:

What If Told Borrowers Do Not Qualify From Multiple Lenders

What If Told Borrowers Do Not Qualify From Multiple Lenders

Over 75% of our borrowers at Gustan Cho Associates Mortgage Group are folks who were told they do not qualify by multiple lenders or had multiple mortgage lender denials.

  • Most lenders have overlays on government and conventional loans
  • Even if borrowers meet the minimum agency lending guidelines, lenders may have higher lending standards than the minimum guidelines set by FHA, VA, USDA, Fannie Mae, or Freddie Mac
  • Borrowers can consult with 5 or more lenders and be told they do not qualify for a home loan
  • Many borrowers are smart and savvy
  • They will not take no for an answer
  • They will research whether or not they meet the minimum lending guidelines
  • If they do will search on Google for Mortgage Lender With No Overlays and will find a list of lenders who have no overlays

Borrowers denied by multiple lenders due to their overlays, look no further. Contact us at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

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