Advice Finding Right Mortgage Lender
This BLOG On Finding Right Mortgage Lender Was Written By Gustan Cho
Finding Right Mortgage Lender that can suit your needs is the most important decision that you 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 and most borrowers due go through stress during the mortgage process and having the right mortgage lender can help you avoid stress during the mortgage process.
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 70% of the borrowers who contact me are borrowers who either have gotten a last minute mortgage loan denial or are going through major stress during their mortgage process with their current lender. The number one reason for a last minute mortgage loan denial of stress during the mortgage process is because the mortgage loan originator did not properly qualify the borrower. This does not mean that the borrower is not qualified or was not qualified but because the borrower either had slight issues or because the mortgage lender who the loan officer represents had or has mortgage lender overlays where this borrower may not qualify with this particular mortgage lender but may qualify with another mortgage lender. This is why is extremely important in finding right mortgage lender. Another huge common complaint that I hear by borrowers who contact me is that their loan officers do not contact them in a timely manner. This is an industry problem and 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 a borrower needs to look for in finding right mortgage lender is to realize that all mortgage lenders are not the same because most mortgage lenders have lender overlays. You need to analyze your own credit profile before you consult with a particular mortgage lender because a lender overlay on a particular issue you have may halt your mortgage process. Remember that there are two types of mortgage guidelines. There are the FHA, VA, USDA, FANNIE, FREDDIE MAC Guidelines and there are the lender overlays. Just because you meet the government and Fannie/Freddie Lending Guidelines does not necessarily mean that you qualify for a mortgage with the particular lender you consult with. If you meet the government and Conventional Loan Guidelines BUT do not meet a particular lender’s overlay requirements, you are still in good shape because all you need to do is search for a lender with no lender overlays like myself. If you are looking for a government and Conventional Loan mortgage lender with no lender overlays, contact me at 262-716-8151. Text me for faster response or you can also email me.
What Are The Typical Lender Overlays Mortgage Lenders Impose?
If you have credit scores of over 800 FICO, have 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 nor any lenders that have mortgage lender overlays 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 prior bankruptcy, foreclosures, deed in lieu of foreclosures, short sales, gaps in employments, or other bad credit, finding right mortgage lender that has no lender overlays is key. 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 you to pay off outstanding collection account balances and charge off accounts to qualify for a mortgage loan. However, many mortgage lenders will require to have you pay off any collections and charge off accounts or have you have a cap on them.
- Minimum Credit Scores: FHA 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 mortgage lenders will have FHA Lender Overlays On Credit Scores . Some lenders may require a 600 FICO minimum credit scores. Others may require 620 FICO minimum credit scores to qualify for FHA Loan. Yet others may have a FHA Lender Overlay on Credit Scores where they will require a 640 FICO credit score.
- Gift Funds: FHA 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 mortgage 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 for gift funds from borrowers who do not have at least a 640 FICO Credit Score. When finding right mortgage lender, make sure that they do not have lender 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 has been paid timely via canceled checks to your lender. If are are renting from a registered property management company, a letter completed by your property manager of the property management company on a verification of rent form by your mortgage lender can be used in lieu of 12 months on time timely rental canceled checks.
- Minimum Credit Tradelines and the longevity of credit tradelines: Mortgage 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 has been seasoned for 24 months. This is not a FHA Requirement but a FHA Lender Overlay impose by the individual lender.
Again, over 70% of my borrowers are folks to come to me after them being told that they got a mortgage denial, they no longer qualify, or are going through major stress during the mortgage process because they were not properly qualified by their loan officer. Many times it is because the loan officer did not know the lender 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 that by navigating this website, you should find all of the answers to your questions.
Finding Right Mortgage Lender Where They Return Messages In Timely Manner
I manage licensed loan officers who represent my 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 a licensed loan officer, 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 the most personal and sensitive information such as tax returns, bank statements, paycheck stubs, bankruptcy paperwork, divorce paperwork, child support paperwork, alimony paperwork, collection and charge off information, judgments, tax liens, and every personal and financial information. Not only are our borrowers counting on us, but so are their families. Without us, they will not be able to fund their home and close on their home. Many folks are packing, 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 and that I will text them right back as of an ETA on when I will call them back or if the matter is urgent to 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
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. Here are how loan officers operate and just because they have their own policies does not make them bad loan officers.
- If you are a borrower and return phone calls or messages are important to you, 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 your loan officer what his or her policies are after you have submitted your loan application and submission. Are you going be dealing with the loan officer, a loan officer assistant, or a processor? Is the main guy going to be available for you?
- Many lenders are online lenders so if visiting a loan officer at a brick and mortar office is important to you, you may want to hire a loan officer that is local to you.
- 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.