How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage

This Article Is About How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage:

How To Get Refer To Approve-Eligible Per AUS To Qualify For Mortgage: There are ways of getting a refer/eligible per automated underwriting system (AUS). Loan officers can play around and keep on trying to get a referred/eligible to approve/eligible findings from the automated underwriting system. The AUS is an intricate sophisticated highly technical computer system. It is like it has its own brain. Powered with the latest technology in artificial intelligence, the automated underwriting system will come to a decision on a borrower within seconds. The AUS will carefully analyze the borrower’s credit, scores, payment history, derogatory, public records, assets, income, and liabilities within seconds and render its decision. In this article, we will discuss and cover how to get a refer/eligible to an automated approval.

Types Of Mortgage Guidelines

There are two types of mortgage guidelines:

  1. Agency Guidelines (AUS Approval)
  2. Lender Overlays

Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans. GCA Mortgage Group just goes by agency guidelines which are the automated underwriting system findings. Most other lenders need to meet agency guidelines but may have lending requirements of their own. However, lenders with overlays require to meet the minimum agency guidelines. They need to submit mortgage applicants through AUS. After they get their AUS approve/eligible per findings, they need to then need to see if the mortgage applicant meets their own lending requirements which are called mortgage overlays. At Gustan Cho Associates Mortgage Group, we only need to get an approve/eligible per AUS Findings. At Gustan Cho Associates, borrowers do not have to worry about the second step, which is overlays since we do not have any. In this article, we will discuss and cover How To Get Refer To Approve-Eligible Per AUS To Qualify For a Mortgage.

How Automated Underwriting System Works

Every lender needs to submit a mortgage application to either Fannie Mae or Freddie Mac Automated Underwriting System, also referred to as AUS on all loan programs. Whether it is FHA, VA, USDA, Conventional Loans, to proceed with the mortgage process, the Automated Underwriting System needs to render an approve/eligible per AUS Findings. However, there are times where the automated underwriting system will not render an approve/eligible. The automated underwriting system is a sophisticated highly technologically advanced computerized system that will analyze the borrower’s 1003 mortgage applications, the tri-merger credit reports, and all data from the 1003 and loan application. Within seconds the automated underwriting system will render a decision. It will either render an automated underwriting system approval, a referred to manual underwriting or denial which is called a refer/ineligible per AUS.

Findings From The Automated Underwriting System

Here are the three findings AUS yields three types of findings:

Approve/Eligible:

  • Approve/Eligible per AUS means that the AUS renders an automated approval where if all information entered in 1003, the credit report is correct, the loan has an automated approval

Refer/Eligible:

  • Refer/Eligible per AUS means that the AUS cannot render an automated approval but may qualify for a manual underwrite

Refer/With Caution:

  • The borrower does not qualify with how AUS is reading the 1003 and credit report

What Does Refer-Eligible Per AUS Mean?

What Does Refer-Eligible Per AUS Mean?

Refer-Eligible per AUS Findings means that the Automated Underwriting System cannot render automated approval.

The file needs to be downgraded to manual underwriting. FHA and VA Home Loans allow manual underwriting. VA Manual Underwriting Guidelines are the same as HUD Manual Underwriting Guidelines. Conventional Loans do not. Nothing is wrong with manual underwriting with FHA and VA Home Mortgages. However, before downgrading the file to manual underwriting, loan officers should do everything possible to get the file and approve-eligible per AUS.

Ways On How To Get Refer To Approve-Eligible Per AUS

The Automated Underwriting System (AUS) is an intricate sophisticated state of the art computer system that analyzes all information about borrowers’ income/credit/disclosures and renders an automated decision within seconds after submission. AUS will only read the information that is on the 1003 and borrowers’ credit report. If credit reports are inaccurate, then AUS will pick up the inaccurate report. Credit Disputes on credit reports are not allowed during the mortgage process. This is because credit disputes automatically discount the derogatory tradelines from the credit scoring model of credit bureaus. AUS does not recognize this. So any automated findings with credit disputes are not valid. Same with public records. If borrowers have public records such as bankruptcies and foreclosures that are not reporting on credit reports, AUS will not recognize that and will render an approve/eligible when the borrower is not qualified. All loan officers should not give up and just take a refer/eligible. Loan Officers can run AUS Findings many times. There are ways on how to get refer to approve-eligible per AUS.  We will explain how to get refer to approve-eligible per AUS on this blog. This blog is intended for both borrowers and loan officers.

Gift Funds Is One Way On How To Get Refer To Approve-Eligible Per AUS

Gift funds are allowed, especially on FHA Loans. HUD Guidelines On Gift Funds allow 100% gifted funds for the down payment. However, Automated Underwriting System and lenders do not view gifted funds for down payment favorably. This holds trues especially for borrowers with under 620 credit scores. There are many cases where borrowers with 100% gifted funds will get a refer-eligible per AUS Findings. But if the loan officer changes the gift funds to the borrower’s own funds, the AUS system will render an approve-eligible per AUS. If the loan officer gets a refer-eligible per AUS, one way on how to get refer to approve-eligible per AUS would be removing gift funds and entering own funds.

Larger Down Payment Is Another Solution On How To Get Refer To Approve-Eligible Per AUS

Is a larger advance payment another solution on how to get a referral for approval - AUS eligible

Another way on how to get referred to approve-eligible per AUS is more skin in the game by borrowers.

  • A larger down payment is a great compensating factor
  • If a borrower with a 580 credit score gets a refer-eligible per AUS on an FHA Home Loan with a 3.5% down payment, try putting 5% to 10% down payment
  • The larger the down payment the fewer risk lenders have so AUS will find it more favorable

On refer automated finding, a larger down payment can be a way on how to get refer to approve-eligible per AUS.

Adding Reserves May Be Potential Solution On How To Get Refer To Approve-Eligible Per AUS

Borrowers who get refer automated findings may try adding reserves and see if the loan officer can trigger that refer to approve-eligible per AUS.

  • Many times one month or more in PITI does wonders and is a great solution on how to get refer to approve-eligible per AUS

This holds true for borrowers with under 620 credit scores, higher debt to income ratios, and substantial outstanding collections and charged-off accounts.

Lower Debt To Income Ratios

Borrowers with higher debt to income ratios and lower scores will often get refer-eligible findings on AUS.

  • By lowering debt to income ratios by paying down or off debts or buying down rates with points may be another solution on how to get refer to approve-eligible per AUS
  • Shopping to get the lowest possible homeowners insurance premium will lower debt to income ratios
  • May want to explore the possibility of going with 7/1 ARM versus a 30-year fixed-rate mortgage
  • Adjustable Rate Mortgages have lower mortgage rates than fixed-rate mortgages

There are many tricks on how to get refer to approve-eligible per AUS to cover on this blog. Every situation is different. To qualify and start the pre-approval process with a direct lender with no overlays, please contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] Our team of licensed and support staff at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.

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