Apply, Apply Again!

As I write this, interest rates in Indiana are at all time lows (but the cost for getting a mortgage loan is increasing thanks to our friends in Washington, D.C.). Real estate property prices are starting to level out, or increase a little in our area, which means it is a great time to be purchasing a new home or refinancing an existing one.

Problem is that many would be buyers are being turned down for loans.

Does this mean that they are bad credit risks? No, not necessarily! It’s just that they may not fit the risk model for the lender they applied with.

The issue is that many lenders have what they call “overlays”. Think of them as more conservative guidelines in which the lender adopts to protect themselves. For example, while they cannot be discriminatory (such as “we don’t lend to women”), they can be  credit based (“we don’t accept scores under 640). This often comes into play when dealing with government insured loans such as FHA who have more lax guidelines than the lenders who are actually loaning the money for you to purchase.

While it’s often disappointing to the borrower who was turned down, it’s not necessarily the end. It’s possible that the previous lender had overlays that another lender may not have. In other words, APPLY AGAIN WITH ANOTHER LENDER!

I have worked with many borrowers in the past who have been turned down somewhere else. In many cases, I have been able to secure the loan when another company could not. In some cases, there were BIG RED FLAGS such as a recently discharged Chapter 7 bankruptcy, judgments, multiple collections, or poor credit that prevented me (or anyone else) from getting the loan approved.

Worst case scenario, time heals a lot of wounds, and if the borrower is willing to work towards repairing and rebuilding their credit or whatever issues are preventing them from purchasing a home currently, I’m more than willing to help keep them on track.

My point: even if you have been turned down for a loan recently, reapply somewhere else! If you want my help and experience, just let me know. I’m more than happy to help!

Scott

Your Indiana mortgage expert specializing in FHA, VA, and USDA Rural Development loans.