What To Do When The Lender Says "No" - Ask specifically why the loan is being turned down. Is the problem with you the borrower, or is it the property? If youre weak on loan qualifying, would a larger down payment make a difference? How about if you reduced some of your debt? Would another loan program help you qualify? Asking specific questions can get you specific answers on what needs to be changed and why.
It is important to understand the reasons you were turned down for your loan. You are entitled to get a free copy of your credit report if you have been turned down for a loan. Review your credit report with a reputable mortgage professional with access to many different programs.
When your lender says no, don't give up on refinancing. Just because you don't fit into a specific lender's available loan programs doesn't mean that you can't qualify to refinance, take cash out, consolidate debt, or otherwise improve your financial situation. There are thousands of different loan programsavailable across the country, and chances are that we can qualify for one which will help you meet your goals, even if your current lender cannot. Contact us at 415-617-5448 for more information on how we can help turn "NO" into "SUCCESS" for your family.
If you cooperate with your broker without getting anxious or disappointed, the good broker will guide you to obtain the financing you need to purchase your dream home.
You should always get a second opinion from a different lender or mortgage broker. There are plenty of lenders out there may have the program that best suits your needs.
Was your loan denied due to bad credit? If so, be sure to carefully examine your credit report for errors or duplications. There are steps you can take to have the errors removed and increase your score. After errors are corrected you should consider paying down some debts. Start with the accounts that are closest to being maxed out as this is a high risk indicator to the credit bureaus. Requesting a higher credit limit on credit cards can also reduce your percentage of used credit. As everyone's situation is different, be sure to ask your loan officer for any tips on building a strong credit report.
Most brokers are approved with 100's of lenders and still have plenty of options for you if the first lender says no. Think of it like this:
A true mortgage professional is going to try to get you in the absolutely best loan you "might" qualify for. Just because you don't qualify for your first choice doesn't mean that there isn't a great loan that would benefit your current situation.
Even though a bank may have turned you down for a mortgage loan, a mortgage broker may very well be able to get you approved with another lending institution. There are many programs out there specifically designed for customers with past credit problems, low available down payment funds, or other issues. While these programs often come with a higher interest rate, they are still worth considering. In many cases, you can get into your home, pay your mortgage on time for a year or so, then look into a refinance. By this time, your credit score will have increased significantly, and your mortgage broker will be able to offer you a new mortgage with much better interest rates.
Improving the quality of your credit will help a great deal in getting approved for a home loan.
A good quality mortgage broker will be able to help you work through the issues and tell you exactly what needs to be done in order to qualify for a future loan.
Your mortgage broker may also try another lender if your loan is denied. There are many lenders with many different programs on the market today. Flexibility is where a mortgage broker's strong point is over a bank. Your mortgage broker can search through many different sources to find a lender who will possibly fund your loan.
If you have certain conditions that hinder your ability to get a mortgage, you may want to consult a mortgage broker. Many brokers have access to loan programs that are created to help home buyers with certain common finance blemish.
The most important thing is to Never Give Up! Work with your loan professional on steps to make homeownership a reality.
Underwriting - This process is usually performed by an "underwriter" who evaluates the borrowers credit, collateral value, and risk involving the loan. After calculating those factors the underwriter will then make a decision to accept the loan or to deny the loan, if denied sometimes there maybe something that the loan must provide before moving towrads funding.
You can help keep the underwriting process flowing smoothly, by supplying any information requested in a timely manner.
Many mortgage brokers have access to Automated Underwriting Engines in both conventional and subprime lending that will Underwrite a loan instantly and give feedback on the conditions needed to close the loan.
Underwriting is the choice made on whether to give a loan to a potential home buyer, based on a full review of credit, assets, employment, and other factors. After reviewing all these determining factors that determine the overall risk, an appropriate rate and loan amount is decided.
Underwriters evaluate the risk of a loan submission based on the guidelines established for the loan program. Underwriters are often able to get an exception to certain guidelines, however it is very rare that an underwriter will grant more than one exception on any one single file.
Underwriting is the main step in truly being approved for a mortgage. This step is where an underwriter compares the information provided by an applicant with the lending guidelines of that particular lender. The underwriter will either approve the loan as submitted, approve the loan when certain conditions are met or deny the loan because it doesn ot meet its guidelines.
As you cannot predict an underwriters decision, a good mortgage broker should be able to get a good feel as to what expect from his/her underwriter.
After your loan is submitted to a lender, the underwriter will evaluate your file, and issue a conditional approval. This can generally be considered an approval, as long as you are able to meet the lender's conditions. However, the conditional approval is NOT a commitment to lend on the part of the lender.
Underwriting is different from lender to lender and program to program. An underwriter is trained to be very detailed and catch items that raise red flags. Due to some of the fraud that has hit the mortgage industry, albeit a very small amount in comparison to the legitimate deals that continue on a daily basis, lenders have lost money. These losses have caused lenders underwriting guidelines to tighten up. One of the many things now looked at with more scrutiny is the appraisal. This is one area where lenders can lose money if they have to take a home back in the case of foreclosure providing the home is not worth the amount the appraiser stated. Lenders now have strict appraisal reviews and in many cases have their own department that handles the review although it can be outsourced. These reasons are why the underwriting process can be lengthy
The underwriting process involves the scrutiny of the borrower's credit report, making sure that the borrower has demonstrated a history of responsible credit management. In addition, if the mortgage program applied for is a full-documentation loan, the underwriter also evaluates the borrower's income and assets to ensure the borrower's capability to repay the loan and ample reserves for downpayment and other expenses.
Automated Underwriting Systems - Many lenders have converted their underwriting systems to an online automated program where Brokers can upload applications over the internet and receive approvals and conditions often within minutes. Not only does this improve customer relations as customers receive legitimate responses within minutes, but it often saves the time and energy of the brokers and Lenders involved, allowing a higher volumn of business within a reasonable time frame.
While online, automated underwriting systems may offer the benefit of speed and efficiency for mortgage brokers, lenders, and most importantly the customer, it very important to understand that there is still room for error.
As a client, it is important that you give the mortgage broker as accurate figures and facts about your personal and financial situation to ensure that if an approval is issued by an automated system that the approval can also be validated by a manual underwriter.
As with most things, there can be advantages and disadvantages to automated or computerized loan underwriting. Obviously, with automated underwriting decisions are made solely on the basis of the information submitted without regard to the individual moods or predjudices that could be possible with human underwriting. By the same token, if there are special circumstances or compensating factors that should be considered, a human analysis is often the only way to make those kinds of considerations.
With the use of automated underwriting systems, many times compensating factors can help contribute to a loan being approved that may not have been approved through regular conventional human underwriting. For a conforming conventional loan usually a total debt to income ratio of 36% or less is the approximate guideline to qualify for a loan. With the use of automated underwriting systems, sometimes loans may be approved with debt to income ratios that are much higher. Debt to income ratios that are between 50 and 60 percent are commonly approved with automated underwriting systems.
The main benefits of automated underwriting are that high quality loans may require less stringent documentation as part of their approval. This presents a benefit to high quality borrowers as a "streamlined approval" is easier to approve and clear for closing. Borrowers who have a large down payment or strong equity position in their property, strong asset reserves, and other compensating factors may be able to qualify for "Fannie Mae" rates even if their credit rating or debt to income levels fall just short of typical minimums. Be sure to inquire with your mortgage professional about their automated underwriting systems and how it can improve the efficiency and possibly cost of your loan.
Modern Automated Underwriting systems also allow us to close loans more rapidly than ever before.