Today i’m going to cover with you something that i’m seeing a lot of right now it really hit in 2021 and it’s a very surprising reason people’s loans are getting declined yes.
It’s something that i’m seeing on the front end of the transaction so what i mean by that is is when people are you want to buy a house you come to a lender.
What happens if loan is not approved?
To get pre-approved part of our pre-approval process is we run your file through what’s known as desktop underwriting or lp so d-u-r-l-p there are two underwriting engines.
Fannie mae and freddie mac that analyze all the data of your loan and they either say approve or refer.
Now if they say approve woohoo let’s get you pre-approved everything looks good the computer likes you par-tay if it says refer or caution it’s a different story you know in some cases.
We can do a manual underwrite which means we override the computer but in a lot of loan types we cannot so this is the surprising reason i am seeing refers are you ready.
Why do banks reject housing loans?
New trade lines yeah new trade lines so i’ve had a couple of these where the scores were like you know 670 680 690 but they bought a car within the last six months or they opened up four credit cards.
Within the last eight months what i’m seeing is i’m really seeing stuff in that you know within the last six to eight months new lines of credit are making.
It so the computer’s tossing it out and this isn’t in all cases it’s just in cases that the computers deeming are higher risk so let’s say.
Your credit history wasn’t fantastic in the past maybe you had a bankruptcy or a foreclosure or a short sale or maybe you just don’t have a lot of credit.
Can I apply for loan after rejection?
Then you get your credit to a decent level and then all of a sudden within the last four months you’re buying a car you opened up two new credit cards maybe.
You were late on something even if your score showing is like 680 or 690 when i’m running it through the computer it’s reading it as right because.
It’s looking at it going wait because these credit reports like they’re not just snapshots of the last two years it’s like your life right so it reads into the credit report.
Even more than i as a human do so my top tip to you guys if you’re thinking about buying if you’ve been pre-approved do not open new trade lines.
Right now now is not the time if i pre-approved you last week and you’re buying a new construction a home do not buy a car do not open up a pottery bond card do not open up.
Read More: Why Can’t I Get Approved for A Home Loan
Can I apply for a loan after being declined?
New trade lines because with certain loans i can’t do a manual underwrite so i am stuck with the computer says so even if i’m looking at this.
I’m going my god their debt to incomes 20 you know they have money the computer doesn’t love it because it’s looking at it going well that’s great that they have money.
I’m imagining this is what the computer says because we don’t talk yet yet um but it’s looking at it going that’s great but they also have a new payment of 700.
A month for the car a new credit card that has a 2 000 balance another thing that has another 50 payment so they’re looking at this and they’re going whot wait.
Who is not eligible for a loan?
Let’s see how they do right that’s that’s my envision of it is that it’s going they just opened up all these new lines of credit they have.
All this new debt we don’t really have the metrics yet to see how they’re going to handle this so i am seeing this when people have a history prior.
That wasn’t as positive even if they redid it all those new trade lines you know can really affect our ability to qualify you and then if you don’t have a lot of credit.
So if you’ve had one credit card for a year and then you open up four last month even if your credit score is 700 there’s a good chance the computer is going to go.
Who is not eligible for bank loan?
He’s only had one before but now he has four and we don’t know i have enough data to see how he’s gonna handle five so don’t open new trade lines guys.
You’re trying to build your credit you know make sure you’re building your credit way in advance of buying a house you know a month two months before not a great time.
To build credit because this is what i’m seeing i didn’t see it like this last year it’s really 2021 where i’ve started to see it repetitively to the point.
When banks fail what happens to loans?
That i feel it’s a pattern and i’m sharing it with you guys so that you guys don’t have that happen to you because it’s it’s really frustrating.
You know i’ll have people who get really mad at me and they’ll be like well but my credit’s this and my debt to.income’s this.and i’m like i know.
But this is what the here you go this is the computer findings and i think it’s because of this so don’t open new trade lines questions comments as always.
I am licensed in 46 states if you didn’t know this i am a mortgage lender and i love doing loans as does my team i have a great team that really cares about our clients.
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