In this blog, we will discuss and cover finding right mortgage lender when buying a home. Finding Right Mortgage Lender that can suit borrowers’ needs is the most important decision home buyers or homeowners will need to make. Shopping for the best mortgage rates has nothing to do with finding right mortgage lender. The mortgage process is very complex. Most borrowers due go through stress during the mortgage process and having the right mortgage lender can help avoid stress during the mortgage process. In this article, we will discuss and cover finding the right lender when buying a home.
Why Does A Pre-Approved Borrower Get A Mortgage Denial?
There should be no reason why a pre-approved borrower should get a last-minute mortgage loan denial. Over 75% of our borrowers who contact Gustan Cho Associates are folks who either have gotten a last-minute mortgage loan denial or are going through major stress. The number one reason for a last-minute loan denial of stress during the mortgage process is because the loan originator did not properly qualify borrowers
Agency Guidelines Versus Overlays
Not qualifying with a particular lender does not mean the borrower is not qualified or was not qualified. But because the borrower either had slight issues or because the lender can have overlays, borrowers may not qualify with this particular mortgage lender. However, they may qualify with another lender with no overlays. This is why is extremely important in finding right mortgage lender with no overlays. Another huge common complaint that I hear from borrowers who contact us is that their loan officers do not contact them in a timely manner. This is an industry problem. Borrowers often do not tolerate such traits where loan officers do not return their phone calls and/or emails in a timely manner.
Does The Lender Have Lender Overlays?
One of the most important things borrowers need to look at finding the right mortgage lender is to realize that all lenders are not the same. This is because most lenders have overlays. Need to analyze own credit profile before consulting with a particular lender. This is because lenders can have an overlay on particular issues borrowers may have. This will halt the mortgage process
Remember that there are two types of mortgage guidelines:
- There are the FHA, VA, USDA, FANNIE, FREDDIE MAC Guidelines
- There are the lender overlays
Qualifying For Agency Loans With No Overlays
Just because home buyers meet the government and Fannie/Freddie Lending Guidelines does not necessarily mean they qualify for a mortgage with any lenders. Borrowers who meet the government and Conventional loan guidelines BUT do not meet a particular lender’s overlay requirements can still be in good shape. This is because all they need to do is search for a lender with no lender overlays like Gustan Cho Associates. Buyers or homeowners who are looking for government or Conventional loans with no lender overlays, contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at firstname.lastname@example.org
What Are The Typical Lender Overlays Mortgage Lenders Impose?
If you have credit scores of over 800 FICO, have a 25% down payment on a home purchase, held the same job for many years, have gotten consistent job promotions over the years, have substantial reserves, have perfect payment history, do not have any collection accounts, do not have any charge off accounts, do not have any judgments or tax liens, and do not have a stint of bad credit on your credit report. You do not have to worry about lender overlays or any lenders that have mortgage lender overlays. This is because you can go to any bank or mortgage lender and you can go for a mortgage loan with no issues. However, not everyone does have stellar credit or financial records. For borrowers who had a prior bankruptcy, foreclosures, deed in lieu of foreclosures, short sales, gaps in employment, or other bad credit, finding the right mortgage lender that has no lender overlays is key.
Typical Overlays Imposed By Lenders
Here are typical lender overlays that many mortgage lenders have. Outstanding Collections Accounts and Charge Off Accounts. FHA and other government loan programs do not require paying off outstanding collection account balances and charge-off accounts to qualify for a mortgage loan. However, many lenders will require to pay off any collections and charge off accounts or have a cap on them.
Minimum Credit Scores
HUD Requires that for a home buyer to qualify for a 3.5% down payment home purchase FHA loan, the borrower needs to have a minimum credit score of 580 FICO. However, many lenders will have FHA Lender Overlays On Credit Scores. Some lenders may require 600 minimum credit scores. Others may require 620 minimum credit scores to qualify for an FHA loan. Yet others may have an FHA Lender Overlay on Credit Scores where they will require a 640 FICO.
HUD allows gift funds where 100% of the down payment and/or closing costs can be gifted by a relative and/or family member of the borrower. However, many lenders will have overlays on gift funds if they do not have a certain credit score, gift funds are not acceptable. For example, some lenders may not allow gift funds from borrowers who do not have at least a 640 FICO. When finding right mortgage lender, make sure that they do not have overlays on gift funds if you do not have enough funds for the down payment and/or closing costs
Verification Of Rent
Verification of Rent is when you can provide 12 months of rental payments that have been paid timely via canceled checks. If renting from a registered property management company, a letter completed by the property manager of the property management company on verification of rent form by the lender can be used in lieu of 12 months on time timely rental canceled checks.
Minimum Credit Tradelines and the Longevity of Credit Tradelines
Lenders may require a certain number of credit tradelines and the seasoning of the credit tradelines. For example, a lender may require three credit tradelines for borrowers with under 620 FICO Credit Scores that have been seasoned for 24 months. This is not an FHA Requirement but an FHA Lender Overlay imposed by the individual lender
Finding Right Mortgage Lender After Loan Denial
Again, over 75% of our borrowers are folks who contact us at Gustan Cho Associates after them being told they got a mortgage denial, they no longer qualify, or are going through major stress during the mortgage process. This is because they were not properly qualified by their loan officer. Many times it is because the loan officer did not know the overlays his or her employer has. Do yourself a major favor and learn the basic mortgage guidelines. I have covered so many case scenarios, guidelines, and overlays on Gustan Cho Associates Mortgage & Real Estate Information Resource Center. By navigating this website, borrowers should find all of the answers to your questions.
Finding Right Mortgage Lender Where They Return Messages In A Timely Manner
I manage a national team of licensed loan officers who represent our borrowers. I am a believer that it takes 100 satisfied borrowers to get one positive review but if you upset one borrower, you can get 100 bad reviews. One of the things that I am a firm believer in and preach to all of my loan officers is that as licensed loan officers, we represent borrowers who depend on us. It is not like selling a product or car or other goods or services. Our borrowers are counting on us by providing us with the most personal and sensitive information such as the following:
- tax returns, bank statements
- paycheck stubs
- bankruptcy paperwork
- divorce paperwork
- child support paperwork
- alimony paperwork
- collection and charge off information
- tax liens
- every personal and financial information
Not only are our borrowers counting on us, but so are their families.
Stress During The Mortgage Process
Without us, they will not be able to fund their home and be close to their home. Many folks are packing, and making moving arrangements, and the mortgage process is so complex that our borrowers deserve answers. Every question by our borrowers is extremely important and needs to be explained. There is no reason why a borrower’s phone call and/or email and/or text message cannot be returned in a timely manner. I have a system in place where I give my cell number to all of my borrowers where the chances are that I am on the phone. I tell my borrowers that if I do not pick up the phone, to have them text me. I will text them right back as of an ETA on when I will call them back. Or if the matter is urgent text me that it is urgent and I will drop my call and call them back. The system works and I am able to keep in contact with all of my borrowers.
Accessibility Of Loan Officer When Finding Right Mortgage Lender
One of the most important factors in finding right mortgage lender is the accessibility of the loan officer. When is the loan officer available and will the loan officer give you his cell number? Can you contact the loan officer after business hours? Every borrower is important and loan officers should always keep in contact with borrowers. However, not all loan officers have the same business ethics.
FAQ To Loan Officers When Shopping And Finding Right Mortgage Lender
Here are how loan officers operate. Just because they have their own policies does not make them bad loan officers. Return phone calls or messages are important to borrowers. Ask the loan officer what his or her policies are. Some loan officers do not work after hours, evenings, weekends, and holidays. Other loan officers do not keep in contact with borrowers after their initial calls and let their assistants handle all the contact with borrowers. Ask loan officers what their policies are after submitting the loan application. Are borrowers going to be dealing with the loan officer, a loan officer assistant, or a processor? Is the main guy going to be available?
Finding Right Mortgage Lender: Local Brick and Mortar or Online Lender?
Many lenders are online lenders; So if visiting a loan officer at a brick and mortar office is important, it may want to hire a loan officer that is local. Where are you located? If you live in New Jersey but your loan officer is in California, maybe the time difference may or may not be a problem. Ask your loan officer when he or she is available. Finding Right Mortgage Lender is very important. Not only does your lender need to offer the right mortgage loan program that is suited to you, but you also need to get along with your loan officer.