Scott Synovic Mortgage Loan Originator Colorado's Mortgage Expert
  • About
  • Mortgage Blog
  • Contact
  • Apply Now

Scott Synovic CMA, CMPS, CMHS
Fairway Independent Mortgage
303.668.3350

October 05th, 2016

10/5/2016

 
Picture
Just Because You Received A Denial Does Not Mean You Cannot Be Approved.

More than 75% percent of mortgage applicants today successfully get a loan. That is the highest percentage this decade according to software provider Ellie Mae, but what about the other 25%? There are applicants that will be turned down however that usually means “not now” or “try again” instead of “no.”

The key is to know why you were turned down. More importantly, is there another way you can be approved?

Here are some reasons you may not have received a mortgage approval even if you meet the mortgage program’s requirements and what to do about it.

Go From "Eligible" To "Approved"

Even though you meet mortgage program guidelines you may still be turned down.

For example, Fannie Mae will allow applicants with FICO scores as low as 620 and debt to income ratios as high as 45%.

FHA allows loans with FICO scores as low as 580 and debt to income ratios between 43% and 50% and in certain cases higher.

Although the applicant meets these guidelines, they may not receive a loan approval. Conforming to "by the book guidelines" is no guarantee and there is still an underwriters judgment call that takes place, and here is why:

Imagine if lenders approved each and every loan that came across their desks. That would not be good for the lender and additionally could potentially hurt the mortgage applicant as well.

Approving a loan for which the loan applicant cannot pay back puts him or her in a worse financial position as opposed to never owning a home.

Lenders would like to see every “eligible” borrower approved however they will not sign off unless they are convinced the future homeowner demonstrates the ability to pay back the loan.

Small Changes, Big Impact

Most lenders approve or turn down a loan based on an Automated Underwriting System or AUS software that weighs all factors of your loan profile. Fannie Mae's version is called Desktop Originator and Freddie Mac's is Loan Prospector.

The algorithms are not always predictable and, in fact, a small tweak or change to your loan profile  can move you to “approved” status.

For example, one applicant might have perfect credit, a higher than normal debt to income ratio, and a very minimal down payment. In this scenario, he does not receive an approval.

However with certain changes, one where the borrower pays off the credit card with a high monthly payment, will improve his debt to income ratio and in turn result in a loan approval.

Consider the following changes if you are looking to get your loan approved:

  • Make a slightly bigger down payment
  • Buy down the interest rate
  • Obtain a rapid re-score to raise your credit score (consult with me for more details)

You could be surprised at what a seemingly small change can do to your approval status.

Compensating Factors are Key

You may get a pass for a less than desirable credit score however a low credit score combined with a high debt to income ratio will most likely not be approved.

When lenders approve loans with certain elements of risk, they like to see an accompanying compensating factor or a positive aspect of the loan file that makes up for, or offsets the not so great part.

For instance, a low credit score can be offset by high income and low debt to income ratio. In certain circumstances, lending limits can be stretched, but only so far.

Know Why Lender Overlays Exist

Sometimes mortgage lenders impose stricter rules than those dictated by Fannie Mae, Freddie Mac or government loan programs. These rules or “lender overlays” are implemented to help lenders keep their default rates low.

For example, a mortgage lender opens a loan and the homeowner soon misses payments, and eventually the loan goes into foreclosure. Fannie Mae or whichever agency the loan is sold to can impose penalties on the lender if it finds the lender made a processing or underwriting error.

As a result the lender imposes overlays to reduce risk and to help ensure they deliver "performing" loans to the respective investors.

Increase Your Approval Chances

There are ways to increase your odds of approval.

First, work with a reputable and knowledgeable mortgage loan originator like myself. I am happy to evaluate your income, assets and credit score and will explain each available loan program

Make sure to call me and get get qualified before property shopping. This is one of the number one ways to minimize disappointment. I can be reached direct at 303.668.3350.

Also, in prequalifiying you can evaluate beforehand any issue or obstacles and determine how to correct these obstacles before finding a property.

If you are already prequalified, great! I cannot stress to you enough, do not change a thing! Delay applying for new credit, changing jobs, moving money around, switching loan programs, or choosing a more expensive property. Once you are prequalified it is important that each of these factors remains constant.

What are today's rates?

Mortgage rates are at all time lows which makes it easier to get approved. Low rates mean reduced payments and helps the lender to better justify your approval status.

Get a rate quote, and see how low your payment can be! Call me today, 303.668.3350!

Apply Now!
Get the Insider Track on Interest Rates!

Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.scottsynovic.com
303.668.3350 Direct

NMLS: 253799 / NRL NMLS: 181407
Regulated by the Division of Real Estate

Scott Synovic is a top performing mortgage loan originator providing superior levels of service and satisfaction to clients and business partners in Colorado - www.scottsynovic.com NMLS #253799 Fairway Independent Mortgage Corporation #2289

Comments are closed.
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    APPLY NOW

    Archives

    February 2023
    January 2023
    December 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015

    Categories

    All

    RSS Feed

popular pages

Refinance
Eliminate PMI
Consolidate Debt
Mortgage Calculators
How Much is My Home Worth?
Interest Rates

Company

About Fairway Independent Mortgage Corporation
Financing Disclaimer
Contact

mortgage insight

join now
Communications Consent
Picture
Scott Synovic NMLS #253799 Fairway Independent Mortgage NMLS #2289
NMLS Consumer Access. Fairway Independent Mortgage Corporation
950 South Cherry Street, Suite #1515, Denver, Colorado 80246

Equal Housing Lender licensed through NMLS Regulated by the Division of Real Estate.
​Licensed Mortgage Loan Originator licensed in Colorado and California.
Not endorsed or sponsored by either state or any government agencies.

Picture
Picture
Picture
Featured in The Denver Post and 5280 Magazine as a Five Star Mortgage Professional
© Copyright 2022. All Rights Reserved.
  • About
  • Mortgage Blog
  • Contact
  • Apply Now