Find A Lender With No Overlays On Home Mortgages

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Lender With No Overlays

Find A Lender With No Overlays On Home Mortgages

This BLOG On Find A Lender With No Overlays On Home Mortgages Was UPDATED On January 2nd, 2019

If there is one thing that can save you a lot of time as a borrower when you are looking to find the right lender for your loan it is knowing Where To Find A Lender With No Overlays.

  •  If you aren’t sure what Lender Overlays are, we are going to go into what these are and how to spot them early on while working with a lender
  • We will also go over how working with Loan Consultants can be a great benefit for all your borrowing needs
  • Believe me when I tell you there are plenty of advertisements out there with lending institutions promising the world to their borrowers, but there will only be a few who can truly deliver and we will figure out how to spot them

Lender With No Overlays: What Is A Lender Overlay?

Now the main part of this article is to identify a Lender With No Overlays but before we get to finding these lenders, we need to go over what Lender Overlays are and how they relate to you, the borrower.

  • In its simplest form, Lender Overlays are additional guidelines that lenders put on loan guidelines above and beyond the normal published guidelines for the loan program
  • Now these Lender Overlays are entirely legal and up to the individual lenders to enforce because after all, they are the ones that have to evaluate what type of risk they are willing to take for their borrowers
  • A lot of lenders feel that minimum guidelines for loan programs are too lenient, thus forcing them to put additional guidelines and hoops for you to jump through to get a loan from them
  • For the borrowers out there who don’t have high quality files as deemed by the lenders will find it hard to get an approval from a lender with overlays
  • If you don’t want to be put through the ringer by a prospective lender, then the key is to find a Lender With No Overlays

Lender With No Overlays: Examples Of Lender Overlays

If you are wondering what types of lender overlays are out there and what you might run into, the following list will go into detail about a handful of overlays and why a lender would put them into place in the first place.

  1. Credit Score:
    1. This is one of the most popular lender overlays you will find as it is also the easiest to enforce on prospective buyers
    2. When it comes to credit scores, there are loan programs that have lenient guidelines that lenders aren’t comfortable with
    3. One of the main examples here is FHA Loans which only require a 580 FICO score in order to obtain a 3.5% down payment loan
    4. However, what you are going to find from a lot of lenders is any credit score under 620 or 640 will be scrutinized and these lenders will have no intention on doing loans for borrowers with a 580 FICO
  2. Debt To Income Ratio:  Another easily enforced lender overlay is the debt to income ratio overlay
    1. Debt To Income Ratio is the ratio of monthly debt obligations against your gross monthly income
    2. In using another FHA Loan example, if you have a 620+ FICO score, you are able to have a 56.9% debt to income ratio for your loan
    3. This means that your proposed mortgage payment, plus monthly debt obligations (credit cards, student loans, car loans) can equal 56.9% of your gross monthly earnings
    4. Now what lenders can do here is limit your debt to income ratio to 50% or even less which can severely affect the purchasing power you thought you had
    5. If you make $5,000 per month and your DTI ratio was reduced by 6.9%, you can now afford $345 less than what you initially thought you could
  3. Loan-To-Value: When thinking about a lender overlay dealing with loan-to-value or LTV, this is also affecting down payment requirements as well
  4. When you find a lender who is putting an LTV overlay on its loans they are basically requiring you to put a larger down payment on your proposed purchase in order for them to approve the loan
  5. On a 3.5% FHA Loan you may find a lender that will require your FHA Loan is a minimum 95% LTV
  6. On a $200,000 loan you will be required to put down an additional 1.5$ or $3,000 if you want your loan to get approved with this lender

Lender With No Overlays: Do Your Homework

If you are running into any of the situations you have seen above or come into contact with any other situations where your lender is not lending to the minimum guidelines, you need to run away.

  • Even though it is in the rights of the lenders to establish guidelines that they want to adhere to, it is not fair to borrowers who are looking for a home with minimal qualifications
  • This is why there is such a high demand for a Lender With No Overlays
  • You can save yourself a lot of the headaches and stress involved with overlays by just doing your homework and find a quality lender like Loan Consultants to assist in getting the job done

Overlays On Government And Conventional Loans

No matter what the loan product is your are looking for whether it be FHA Loans, Conventional Loans, VA Loans, USDA Loans, or Jumbo Loans having a Lender With No Overlays is vital in ensuring your loan can close on time and you will not be met with last minute denials.

  •  A lot of the borrowers that I come into contact with are borrowers who are in this exact situation and it is a week or two before their scheduled close date and their lender backs out on them at the last minute citing a guideline that they did not satisfy
  • This could not be more evident with a case we just had last month where a VA borrower contacted us saying he just got a last minute denial and was a week out from his closing
  • We took this borrower on with a 582 FICO score and a 60% debt to income ratio and we got his loan closed in 21 days
  • Now after working with his old lender for 30+ days, he was still met with a denial at the end
  • If this borrower would have searched out for a Lender With No Overlays, he would have found us right away and he could have saved himself the time and frustration of dealing with the old lender
  • If you are interested in a Lender With No Overlays then Loan Consultants is the right place for you to be to ensure your loan gets closed on time and to the minimal guidelines

If you want to get your loan started with us, please give us at Gustan Cho Associates at Loan Cabin Inc. a call at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. The Gustan Cho Team at Loan Cabin Inc. are direct lenders with no overlays on government and conforming loans. I look forward to working with each and every one of you!

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