From the consumer - "I have bad credit".. "my credit is so so"... "my credit is good". "My credit scores are good", etc, etc. I have heard it all and just this alone doesn't make or break you as a potential buyer when wanting to buy a home.
The thought process of an average loan officer - "Yippie, my borrower has a 635 credit score and my company's cutoff is 620. This borrower fits the credit ratios also, so I can do the loan."
Knowledge is power people. I know some loan officers in the past that made the mistake of primarily looking at the credit score, aka the fico score,and if it fit the criteria, that they thought they had a good loan. Many would miss some lates on the credit report. And yes, some even missed judgments and or collection accounts.
A good loan officer is going to understand how credit works, what to look for, and know if they need good credit explanations. Also to show documentation to prove such explanations, and sometimes compensating factors.
Summary : I bring this up because I currently have a borrower who has a middle credit score, fico score of 638. She originally started the loan application process with another lender in the beginning of May. Well, this lender not only missed 2 commitment dates, but the closing date of June 30th. This is a very tough FHA loan, even though she has a credit score of 638. She has a Ch. 7 bankruptcy that was discharged in June of 2003. But after this, she had a voluntary repossession of a car in 2008, which totals $10.800. Yes, this will have to be paid off. Her credit outside of that? Just one credit card that she has had for 1 year. And I have qualifying ratios of 38/48. But yes, I have several excellent compensating factors, such as canceled checks for rent and a car that someone else bought for her, and about 2 years worth of cash reserves. And the fact that she has been on her job for 9+ years and her mortgage payment to only increase by 12% more than her rent payment.
Overall, the worst part was that the other lender came back to her about a week ago and said, "sorry, we can't do your FHA loan because your credit score doesn't meet our criteria." Not every lender can do every deal. Her credit score never changed. To me, just a loan officer or lender saying... it was a hard deal and we didn't review the facts upfront, when we gave you a pre-approval letter.
My advice? Just be careful of loan officers that promise loans to those with bad credit or less than perfect credit. And those that make it sound like FHA loans are good for those that have bad credit. You need the knowledge of a good loan officer and a good lender such as Infinity Home Mortgage, that has common sense underwriting, and to put the pieces together.
Those with less than perfect credit or low credit scores - Please don't hesitate to reach out to me. I would love to help you and show you how to get your scores up.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
_____________________________________________________________________________________________________________________________
FOLLOW ME ON FACEBOOK
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- FHA Home Loans - Mortgages -
Experience & Knowledge at its BEST !!!
Follow me on:
______________________________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
"loan officers that promise loans to those with bad credit" Follows the age old advice, if it sounds to good to be true it probably is.
Great information about how loans are given on NOT just credit "scores" but a person's credit as a whole. And the only easy deals right now... are cash deals.
JIM... . well, common sense says... to double check if it sounds to good. But wait, that sometimes takes work, is an effort. lol Or just the fact that if a so-called professional says it will happen, that many will believe that. How would one know otherwise? thanks
TAMMY... . I think that is one of the many issues in the mortgage business, that so many just think it's based on credit scores, and if they have the right credit score, that the loan can be done. And thanks for the polite compliment.
No easy deals. There are a lot of thing to go into making a loan. Also remember that some folks are born to be renters.
thanks again for including another for my outside blog! I love how you are committed to educating the public about the art of the transaction!
some good and timely advice for me, thanks
Jeff, Thanks for the post. I mistakenly thought that the market conditions created a purging of the bad real estate agents and loan officers. Clearly, I was wrong!
MICHAEL... . there definitely less easy deals than once before... but then again, define easy mortgage loan.
RENEE.... . <blushing> Thanks for that very polite compliment and for the kind words. I just truly love educating people.. I enjoy it.. and I like pointing some things out that might seem normal to many, but aren't... like misleading ads and such. and thanks for your support..
TERAl... . thanks, I am glad.. you had said timely.. could you possibly elaborate on that? thanks
WILLIAM.... . my pleasure.. and I am assuming from the tone of your comment, that you gave me a compliment? Sorry.. maybe it's just late and I am not understanding it 100%. ;o)
Interesting stuff Jeff. It takes a good mortgage broker to get a loan through when everything is not perfect. And you're the one to do it.
I have had two properties with PAs on them and the buyer couldn't perform with the same mortgage company. I really wonder what they are doing over there. Wasting my time, the seller's time, the buyer's time. It is very frustrating to say the least.
Jeff, This one is worth reblogging by everyone. Too many time people ask about the Credit Score and use that as the sole basis of their opinion. This is why it is so important that borrowers listen to what loan officers say. Many cases I have spoken to borrowers that started a loan with a lender that issued a preapproval/qualification letter only to be declined. Too many Loan Officers issue the letters without propertly evaluating the entire application.
GABE.... . as some loan officers would agree, it takes a loan officer that will ask the right questions and actually review all documentation in order to give a good pre-qual letter, let alone a good pre-approval letter. And thanks for the compliment.
DON.... . sometimes some states have different issues than others. .. or maybe I am just tired. But what is a PA? In regards to the lender, I guess they haven't given you or the borrower specifics? But yes, I have seen some lenders or loan officers just waste everyones time on false hope. thanks
TIM... . bingo... I think you hit the nail on the head when you made this statement...
" Too many Loan Officers issue the letters without properly evaluating the entire application."
I guess I could have used this sentence to sum up my whole post... it would have been short & sweet.. and to the point. thanks and thanks the compliment.
DON... silly me.. PA = pre-approval - In any case, yes, that gets under my skin. One that gives a Pre-approval and the loan falls apart or is denied. I am actually writing a post about this as we speak, hence what made me think of PA. thanks