Going To Bank For Mortgage Application
Most first time home buyers normally go to their local bank to see if they qualify for a residential mortgage loan. Banks are full service lending institutions where they cater to the general public in lending auto loans, home loans, personal loans, business loans, commercial loans, and offer other financial services such as saving accounts, checking accounts, retirement accounts, investment accounts, credit cards, and such. Unfortunately, banks have many mortgage lender overlays when it comes to approving mortgage loans.
What Are Mortgage Lender Overlays?
Mortgage lender overlays are when a mortgage lender has additional requirements on top of the minimum mortgage lending guidelines by FHA, VA, USDA, Fannie Mae, and Freddie Mac. For example, minimum credit score requirements for a 3.5% down payment residential mortgage loan through a FHA loan program is 580 FICO per FHA mortgage lending guidelines. A mortgage lender with no overlays and that go strictly by DU FINDINGS of approve eligible will approve you for a 3.5% down payment FHA loan as long as you meet the rest of the lending guideline requirements. However, most banks have their own mortgage lender overlay with a minimum of 640 FICO credit scores. Also, many borrowers get mortgage denial from bank because most bankers require no late payments after bankruptcy or foreclosure. Other reasons borrowers get denial from bank is because they do not have enough credit tradelines and no rental verification. Not having two continous years of employment is another reason for mortgage denial from bank. All the reasons I have given above are examples of mortgage lender overlays and that does not mean every bank has these overlays but most of them that I know of do have them. Another example of mortgage denial from bank is that most banks want to see borrowers with no open collections. Open collections is not a FHA mortgage lending guideline and you can still qualify and get a mortgage loan approval with open collections. Another thing you need to be aware of is that paying off an open collection will severely drop your credit scores.
Seek Other Lenders If Mortgage Denied From Bank
If you have mortgage denied from bank, do not worry. There are many mortgage lenders who specialize in helping folks who get their mortgage denied from bank. Over half of my clients are folks who could not qualify with other mortgage lenders. If you have been denied for a mortgage loan in Illinois, Florida, Wisconsin, Indiana, and California due to mortgage lender overlays and see if you qualify for a mortgage loan, contact me at 262-716-8151 or at www.gustancho.com . I represent wholesale mortgage lenders who have no mortgage lender overlays for both FHA and Conventional Loan Programs in Illinois, Florida, Wisconsin, Indiana, and California.