How To Avoid Mortgage Denial During The Loan Process

This Article Is About Steps On How To Avoid Mortgage Denial During The Loan Process

There is no reason for a borrower to get a mortgage denial after they have been pre-approved. We are going to cover steps to avoid a mortgage denial. A mortgage denial can be an incredibly costly process, financially and emotionally.

It is important to work with a team of mortgage professionals who are educated in their field. Mortgage guidelines are constantly changing. The COVID-19 coronavirus outbreak has sent ripples through the mortgage industry. This is an amazing time to buy or refinance a property. Interest rates are at historic lows. Already in the year 2021, we have seen a slight uptick in interest rates. We do not want you to lose your opportunity to take advantage of the market. In this blog, we will detail the mortgage process and tips to avoid getting a mortgage denial. It is important to understand the Gustan Cho Associates does not have LENDER OVERLAYS on any of their FHA, VA, USDA, and conventional mortgage products. Even if you have been turned down by your current lender, we encourage you to call us today.

Steps On How To Avoid Mortgage Denial: Key Aspects In Preparing For A Mortgage

Key aspects to prepare for mortgage approval:

Payment history:

• Payment history is one of the most important qualifications when attempting to get a home loan
• Late payments are not only killing your credit score, but they may also kill your mortgage qualifications
• It is important to pay your bills on time if you were trying to buy a home
• Some loan products will allow a late payment sprinkled in here and there
• But the general rule of thumb is you need to have at least 12 months of on-time payments
• Depending on your overall credit score and credit profile, you may be able to get around an occasional late payment
• Please remember the old collections and/or charge-offs may not be a factor with Gustan Cho Associates

With many other lenders, this could be a hard stop and is one of the most common lender overlays!

How Much House Can I Afford Versus How Much Can I Qualify

Keeping a realistic budget.

Many borrowers are concerned with their debt to income qualifications. It is important to stay within a monthly budget that will be comfortable for your long term. Just because your debt to income may qualify you to a $2500 mortgage payment, it does not mean that is a comfortable payment for you and your family. Make sure you speak with your loan officer about your comfortable monthly payment. Go over specific properties with your loan officer before submitting an offer. You want to know your total housing payment for the specific address.

Steps On How To Avoid Mortgage Denial: Online Home Counseling

Online home counseling:

• If you are in the market for a home loan but have less than perfect credit, taking an online homeownership counseling course may be in your best interest
• Not only does the underwriter like to see you are taking the initiative to have a successful payment history on your mortgage, but you may also learn a lot from this class
• Homeownership is much different than renting
• When something breaks or goes wrong, you do not have a landlord to call
• You are responsible to fix the house yourself
• Most of the time your insurance deductible will be at least $1000
• For example, if you have a water pipe break and only cost $800 to repair, it does not make sense to involve your insurance
• It is important to have a slush fund for some minor repairs around the house
• The homeownership class is free and will allow you upfront knowledge and prepare you for what to expect during the homeownership

Here is the link to enroll in the FANNIE MAE FRAMEWORK homeownership counseling online course.

Reserve Requirements

RESERVES:

• Reserves can be incredibly important for pre-approval purposes
• Reserves are defined as liquid capital left in the bank after down payment and closing costs
• Reserves can also be in the form of retirement funds
• A mortgage company will not hold your reserve money, but we do need to document you have the funds
• One month of reserves is equal to one month of the total mortgage payment, including principal, interest, taxes, insurance, and any homeowner’s association dues
• If you have three months worth of mortgage payment as liquid reserves, that is considered a compensating factor and will generally increase your odds of approval

The more funds you have at your disposal will only increase your buying power.

Steps On How To Avoid Mortgage Denial: Is The Loan Process Stressful?

Many of our readers are not familiar with the mortgage process. Most Americans hear nightmarish stories on how hard it is to purchase a property. The truth is with the right mortgage team, the process is very smooth. The first step of the process is to call Mike Gracz on (800) 900-8569 (or email gcho@gustancho.com). You and Mike will have a one-on-one mortgage consultation going over everything from your credit, budget, and mortgage needs. Mike will then pair you with a licensed loan officer in your state. You will fill out an online mortgage application and upload the required documentation.

Below is a list of what you can expect to upload.

• Last 60 Days Bank Statements – to source down payment
• Last 30 Days Pay Stubs
• Last Two Years W2’S
• Last Two Years Tax Returns
• Driver’s License

After you have completed the application, your loan officer will send you a pre-approval letter or discuss
steps to qualify as soon as possible.

Shopping For A Home With A Pre-Approval Letter

With your pre-approval letter, you will then pair yourself with a licensed realtor who can assist you in finding the home that’s best for you and your family. Now it’s time to submit an offer. Once you find a home you were looking for, you will submit the offer with your specific negotiations. Assuming your offer is accepted, the mortgage process truly begins. The first step of the process is to electronically sign loan disclosures for the specific property. Your mortgage processing team will then order all required verifications in the appraisal report.

The appraisal is paid for upfront by you, the borrower. While your mortgage team is waiting for the appraisal to be completed, your file will go through processing and be submitted to the underwriter. The underwriter will then review all documentation and send you an initial approval. This initial approval will have some conditions you need to satisfy. Typical conditions include updated pay stubs and bank statements to keep all documentation current. Once you send in all items required by the underwriter, you will be put in line for clear to close. Assuming the documents satisfy all of your conditions, your loan will then be issued a clear to close. Your loan team will then coordinate with the title company and send you the final figures for closing.

Congratulations, you now are ready to sign documents with your title company and get the keys to your new home. As mentioned above, this process is not very difficult. You just need to have the right team of mortgage professionals. We encourage you to reach out to Gustan Cho Associates today, we are experts in assisting all parties for a smooth closing.

Qualifying For A Mortgage With A Lender With No Lender Overlays

From the information above, you should be able to see Gustan Cho Associates are experts in the mortgage process. Our loan officers and support staff are up to date on mortgage guidelines and are here to help you and your unique situation. You may have been turned down by another lender or not getting the customer service you deserve. Our team is ready to help seven days a week. We encourage you to check out our reviews and continue to research our company. We are able to lend based on agency guidelines and no additional lender overlays. Even if you have been turned down in the past, please reach out to the Gustan Cho Associates today. Please call used questions. Gustan Cho Associates has a national reputation for being a one-stop mortgage shop. Besides not having any lender overlays on government and conventional loans, Gustan Cho Associates has dozens of non-QM and alternative mortgage loan programs.