Factors Getting Mortgage Approved And Closed On Time


Factors Getting Mortgage Approved And Closed On Time

This BLOG On Factors Getting Mortgage Approved And Closed On Time Was UPDATED On May 9th, 2019

Home Buyers, whether they are first time home buyers or seasoned buyers or a homeowners thinking of refinancing, the first most important step is to see whether or not they qualify for a mortgage. Factors Getting Mortgage Approved is meeting the minimum lending guidelines. Most Important Factors Getting Mortgage Approved and closed on time is borrowers to be fully qualified.

  • The mortgage qualification process is not as simple as a loan originator just taking 1003 mortgage loan application, running credit and if income and credit scores are in line, the loan officer issues a pre-approval letter
  • Factors Getting Mortgage Approved and closed on time involves much more than that
  • If loan originator does not qualify borrowers the right way initially, they will go through a stressful mortgage approval process
  • May get denied at the end or go through stumble blocks during the mortgage process
  • If the loan officer did not package the file correctly, providing mortgage conditions requested by mortgage underwriters can be very stressful
  • Reasons, why mortgage loans get denied at the very end, is due to the fact borrowers were not qualified the right way
  • Just because the borrower does not qualify currently does not mean they cannot get a mortgage loan approved and closed
  • Borrowers who do not meet mortgage qualification requirement the loan originator needs to correct the issues where they can meet the minimum guidelines or find an alternative financing loan program

Good Income And Credit Scores Borrowers Who Cannot Qualify

Common sense dictates that if the borrower has a good income and high credit scores they should qualify for a mortgage loan.

  • However, this is not always the case
  • Borrowers can have great income and great credit scores
  • However, with recent late payments on mortgage payments in the past 12 months, they may not qualify for a mortgage loan
  • This is the case even if they sold their home and the balance mortgage loan is paid off
  • One of the main mortgage qualification requirements is they need to have been timely in the past 12 months
  • Some lenders may accept a one time 30-day late payment
  • With multiple late payments on mortgage payments, borrowers may need to wait 12 months until mortgage late payments have seasoned
  • Also, borrowers can have a good income and good credit scores
  • However, recent late payments in the past 12 months may be an issue in getting a mortgage loan approval
  • Borrowers with prior bad credit and low credit scores can qualify for a mortgage
  • However, mortgage lenders want to see they have re-established credit
  • No late payments in the past 12 months
  • Borrowers can have unsatisfied collection accounts and charge offs and still qualify for a mortgage loan
  • However, the key is to have been timely on your payments the past 12 months

Automated Approval from Automated Underwriting System

Before mortgage loan originator issues you a pre-approval, make sure that they run mortgage application through either Fannie Mae’s Automated Underwriting System or Freddie Mac’s Automated Underwriting System.

  • Fannie Mae Automated Underwriting System is also known as DU, or Desktop Underwriter
  • Freddie Mac Automated Underwriting System is referred to as LP,  Loan Prospector
  • Need an approve/eligible per DU FINDINGS or an approve/eligible per LP FINDINGS before getting a pre-qualification letter
  • It is highly recommended that buyers do not enter into a real estate purchase contract without a solid pre-approval letter that has been fully underwritten and signed off by a mortgage underwriter
  • Loan officers should not sign off on pre-approval letters
  • Only mortgage underwriters
  • Loan Officers can issue pre-qualification letters
  • Borrowers who get referred/eligible,  loan officer should run it by the mortgage underwriter to see if file can be manually underwritten
  • Referred with Caution means there are major issues with a loan application and mortgage loan originator needs to re-review and analyze entire loan application

Automated Approval From AUS Versus Overlays

Just because borrowers get an approve/eligible per DU FINDINGS and/or LP FINDINGS does not mean they are solid and set to go.  It depends on the mortgage lender.

  • There are lenders like myself where we have zero lender overlays on government and conventional loans
  • We just go off DU FINDINGS and/or LP FINDINGS
  • This is because we have no mortgage lender overlay
  • A mortgage lender overlay are additional guidelines that are above and beyond the automated findings where a particular lender implements
  • For example, if debt to income ratios are at 56.9% and get the approve/eligible per DU FINDINGS, we have no issues
  • However, if a lender has overlays on debt to income ratios that caps debt to income ratios at 45% or 50% and debt to income ratios are at 56.9%, that lender cannot do the loan because the borrower will not qualify with that particular lender
  • The borrower will qualify with me because I just go off the findings of the automated approval

Unpaid Collection Accounts

Same with collection accounts.

  • Unpaid collection accounts do not have to be paid off to qualify for a home loan
  • With automated approval with unsatisfied collection accounts, borrowers should be set to go if they choose a lender with no overlays like myself
  • However, many lenders have overlays that require borrowers to pay off unsatisfied collection accounts in order to meet their lending standards
  • With an approve/eligible per DU FINDINGS or LP FINDINGS with unsatisfied collection accounts, borrowers need to check with mortgage loan originator whether or not his mortgage company has overlays on collection accounts

Mortgage loan originators are human and make mistakes like many of us.

  • Many times, a mortgage loan originator may just submit a mortgage application to processing and underwriting without checking on their overlays or not properly qualifying borrower
  • This will backfire at the end where mortgage loan may end up getting denied
  • Mortgage Qualification is very basic
  • But yet the most important factor in getting a mortgage approved and closed on time

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