How To Get Refer To Approve-Eligible Per AUS Approval

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will cover and discuss how to get refer to approve-eligible per AUS approval. One of the most frequently asked questions at Gustan Cho Associates is how to get refer to approve-eligible per AUS. Experienced loan officers can play around with the automated underwriting system (AUS) where they can get a refer/eligible file to an AUS approval. They may need to add the more down payment, add a non-occupant co-borrower, withdraw gift funds, add more reserves, pay off collections and/or charged-off accounts, or lower the loan amount. In this blog, we will go over how to get refer to approve-eligible per AUS approval.

What Does Refer/Eligible per Automated Underwriting System Mean?

What Does Refer/Eligible per Automated Underwriting System Mean?

When the automated underwriting system (AUS) renders a refer/eligible automated findings, it means the mortgage loan applicant is most likely eligible to qualify for the loan program entered, but the AUS is not able to determine whether it can render an automated approval. The AUS is referring to the file for a manual underwrite by a human mortgage underwriter to confirm the borrower is eligible.

Can Loan Officers Have a Refer/Eligible File to an Approve/Eligible per Automated Underwriting System?

One of the frequently asked questions the team at Gustan Cho Associates gets asked is how to get refer to approve-eligible per AUS approval so borrowers can qualify for a mortgage. There are ways of getting a refer/eligible per automated underwriting system (AUS) to an approve/eligible per AUS.  Loan officers can play around and keep on trying to get a referred/eligible to approve/eligible findings from the automated underwriting system.

What Is 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 Programs and Guidelines

There are two types of mortgage guidelines:

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

Gustan Cho Associates Mortgage 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.

Can One Lender Deny You and Another Approve You?

Not all lenders have the same guidelines on government and conventional loans. Lenders may have the same mortgage loan programs but have different mortgage guidelines. Just because one mortgage lender denies you for a mortgage does not mean another lender will not approve you. This holds true even if the mortgage loan are government-backed mortgages or conforming loans.

Can I Apply For Another Mortgage After Being Denied?

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, or 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 when the automated underwriting system will not render an approve/eligible.

How Long Does It Take For An Automated Findings From The Automated Underwriting System

How Long Does It Take For An Automated Findings From The Automated Underwriting System

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 applications. 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?

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.

Solution 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 During The Mortgage Process Will Halt The Underwriting Process

Credit Disputes During The Mortgage Process Will Halt The Underwriting Process

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 reported on credit reports, AUS will not recognize that and will render an approve/eligible when the borrower is not qualified.

What Will a Loan Officer Use To Determine If You Will Be Pre-Approved For a Mortgage?

All loan officers should thoroughly qualify borrowers before issuing pre-approval letters. The pre-approval stage is the most important stage of the mortgage process. A rushed pre-approval without properly qualifying borrowers will cause stress during the mortgage process. The qualification process should be thorough with no steps being skipped. If the borrower gets a refer/eligible per AUS, loan officers should try their best to try to get an approve/eligible per AUS. Loan Officers can run AUS Findings many times. There are ways 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 Systems and lenders do not view gifted funds for down payments favorably. This holds true 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 how to get refer to approve-eligible per AUS would be removing gift funds and entering their own funds.

A Larger Down Payment Is a Solution To Get Refer To Approve-Eligible Per AUS

Another way how to get referred to as 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 how to get refer to approve-eligible per AUS.

Adding Reserves May Be Solution 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.

Refer To AUS Approval By Lowering Debt-To-Income Ratio 

Borrowers with higher debt to income ratios and lower scores will often get refer-eligible findings on AUS. 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 a 7/1 ARM versus a 30-year fixed-rate mortgage. Adjustable Rate Mortgages have lower mortgage rates than fixed-rate mortgages.

How Do You Make Sure You Get Approved For a Mortgage

There are many tricks on how to get refer to approve-eligible per AUS to cover in 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 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, on evenings, weekends, and holidays.