Category: Loan Approval

WHY IS MY LOAN APPROVAL TAKING SO LONG?

Why is there a difference in the amount of time it takes to get an approval for a refinance vs purchase loan? There is currently a high volume of refinances.  Some take time to get through underwriting process.  Purchase loans get through pretty quickly. A preference given to purchase loans in underwriting.  Time frames for a purchase loan is bound by contract; the close of escrow date.  Given the legal time frame to approve, lenders prioritize purchase loans and move them to the front of the line. Refinances get pushed back.   The fact that there are thousands of people...

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LOAN APPROVAL:  IT’S NOT THAT PERSONAL

Years ago, when our parents and grandparents went to the local bank to get a loan, they would meet with a banker who they likely knew.  The banker would consider many factors, including their personal relationship, in determining whether to approve the loan. This is not the case today. Today, it is about the saleability of the loan.

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ARE YOU A RECENT COLLEGE GRADUATE

Are you a recent college graduate? Are thinking about becoming a homeowner? Many recent graduates feel they may not qualify to purchase a home. College education is more expensive than ever and many students leave school with substantial student loan debt. Let’s take a look at how lenders consider student loan debt when underwriting a mortgage application. If the monthly payment for the student loan appears on the credit report, it will be used in calculating the debt-to-income ratio. If the credit report does not reflect the correct monthly payment, the undewriter may use the monthly payment that is on...

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IF YOU CANNOT QUALIFY

Sometimes, you may not be able to qualify on your own, and may ask someone to sign with you to help you qualify. If so, the co-signer will have to complete a loan application and will have to qualify, too. Lenders will combine the incomes and debts of both borrowers and base the loan off of the lower of the two credit scores; both borrowers will be on the loan and on the title. So, if you cannot qualify on your own, consider adding a co-signer. We offer a variety of products and services, ask us how we can assist...

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LOW RATE ADS

You’ve most likely heard on the radio lenders boasting they can get you approved in minutes or days by simply going to the website and clicking a button. Is that all it takes nowadays to get approved and to go to closing? Can you close the loan right after you are approved in mere minutes? Well, the short answer is no. By “approval”, they may mean their computer program analyzes the data you input, and qualifies you for the loan. However, what they fail to tell you is that you still need to sign an application package and submit supporting...

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LENDER APPROVAL: DEBT-TO-INCOME RATIO

You may have heard of this term when applying for a loan; what does it mean? Debt-to-Income ratio is a comparison of monthly debts to monthly income, this is a major factor lenders consider when underwriting a loan. Lenders like to see the ratio at or below 43%, but loans have been approved up to 50%. Example: Let’s say you are salaried and gross $4,000 per month; Lenders use your gross wages, not take home, for calculating the ratio. Assume your proposed house payment is $1,000, you pay $400 in student loans and another $300 per month for an auto...

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RENTAL INCOME AND LOAN QUALIFICATION

If you own rental properties, you can include the net rental income for qualification. But, how much of this rental income can you include? If you owned the rental for less than a year, and it does not appear on your last tax return, underwriters generally use 75% of the rental income on the lease. You would subtract the mortgage payment, real estate taxes, homeowners insurance, and HOA to get the net rental income for underwriting. If you owned the rental for more than a year, and it is reported on your tax returns, then the calculation is based off...

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LOAN APPROVAL

You received the loan approval from the lender. Does this mean you are done, and that you can now go to closing? Not quite. The loan approval is usually issued by the underwriter after the initial review of the file. It is usually a conditional approval listing conditions that need to be met prior to the loan being final approved and cleared for closing. For example: the underwriter may have found other addresses associated with your name. You will be asked to write a letter explaining whether you currently own those properties. If you don’t own them, then that condition...

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RESPONSIBILITY IN LENDING

There is a great responsibility in lending; recently, there appears to be a movement in the marketplace to commoditize lending by making products available on-line. The emphasis is on closing the loan quickly and making the process automated; this approach implies that counseling to find the right mortgage is not necessary, and leaves the choice of finding the right mortgage to the customer. This approach, however, may not work for the following sample of customers who may need advice to find the right mortgage: 1. First time homebuyers 2. Seniors who may benefit from a reverse mortgage 3. Step up...

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