Mortgage Loan Denials occur when a mortgage loan underwriter denies a mortgage loan application because the potential borrower does not meet the minimum mortgage lending guidelines or the mortgage lender overlays that are in place. As with anything, there are different reasons for Mortgage Loan Denials but they can all be avoided if you are informed on what to do. Every mortgage loan program that is out there has minimum mortgage lending guidelines that are set to abide by. For example, Fannie Mae and Freddie Mac are the 2 government sponsored entities that are in charge of creating the guidelines for Conventional Loans. On the flip side, HUD or the United States Department of Housing and Urban Development is in charge of creating the guidelines for FHA Loans. For the smaller quantity loans, the Department of Veteran Affairs creates the lending guidelines for VA Loans and Rural Development sets the standards and guidelines for USDA Loans.
Aside from the minimum lending requirements put together for each mortgage loan program, lenders may also have their own additional guidelines that need to be met and followed in order to avoid Mortgage Loan Denials. The additional requirements are called mortgage lender overlays and are primarily put in place because lenders aren’t confident in making loans to borrowers who only meet the minimum requirements of a loan program. If you have run into this and want to work with a lender who doesn’t have lender overlays, you need to call me at 888-900-1020 or visitwww.loanconsultants.org and apply today! Let’s go into an example of how you can run into lender overlays and the way they can derail a potential loan for you. According to standard FA Loans, you only need a 580 FICO credit score in order to secure a 3.5% down payment loan. However, the lender overlay can say that for FHA Loans with 3.5% down payment, you must have a 640 FICO credit score in order to be approved. Let’s say you have a 630 FICO credit score and you think you should get approved, if you were at this lender, the lender overlay would require a denial.
As you can see, this was just one of the Mortgage Loan Denials, with plenty of more to be had. You need to be informed on these different example so you don’t make any mistakes when going to purchase a home. Mortgage Loan Denials shouldn’t really be happening if you have a competent loan originator who knows what he is doing and does a proper pre-approval process. To prevent Mortgage Loan Denials, the loan originator needs to go through credit, credit scores, income, debt to income ratios, payment history, and waiting periods after bankruptcies or foreclosures. If you are dealing with a loan originator who just pulls your credit and give you a pre-qualified letter, please be careful here as this may do you more harm than good and cause you Mortgage Loan Denials down the road. If you don’t want to deal with this type of setback you need to give me a call at 888-900-1020, and we can get you on the path to home ownership without all the speed bumps.
In conclusion, you can see that Mortgage Loan Denials can be and should be avoided at all costs. What it comes down to is you need a loan originator who understands the pre-approval process. If there is a question that comes up when going through the pre-approval process, the loan originator should reach out to a manager in the underwriting department so they will get a first-hand response if the case scenario will be approved or not. There is no need for a loan originator to assume anything, and doing so can waste everyone’s time. If you need a qualified loan originator and an expert pre-approval, look no further. Please feel free to reach out to me at 888-900-1020, email email@example.com, or visit my website www.loanconsultants.org.