Good Credit Scores could equal ticking time bomb - BAM

I had a buyer who was well qualified with good scores. The lender found out he owned a lot. Now he had owned this lot for 40 years, but the lender insisted they have a title search done to PROVE they had no liens on it. You never know what they are going to look at.

A realtor should not waste his or her time showing homes until the client has spoken to a loan officer. Great info!

Jeff, some good information to the public to be aware of and take heed!

Most buyers, and many agents, don't understand that credit scores will in fact vary based on the type of company making the inquiry.  Mortgage scoring models are different that those used in other industries.  I always caution everyone against purchasing their credit scores.  They are rarely ever the same as what a mortgage company will pull. 

Too many will incorrectly assume a buyer qualifies solely due to a credit score.  I had one last week with a 90% DTI TODAY. That is before a new purchase was even factoed in  He did have a bank issued a PQ letter to.  I am sure you can guess the name of it. 

To Kathy's comment, free and clear properties are now requiring more documentation now than before.

Jeff,

With buyer impatience at an all-time high, I'll take them out one time to see houses, all my loan officer is working over there details.

Rich

Jeff, I agree with you totally. If someone tells you what their credit score is, whether 650 or 850, you're taking them at their word. We all can get, and probably have been, lucky by taking out a buyer or buyers based on what they've told us, and everything ended up working out. But I don't think you can have a successful business based on luck, right? Meet with the buyer before showing homes. Have them talk to a mortgage professional, like Jeff, to make sure they can purchase, and what their price range is. Without knowing all the facts, it's just a stab in the dark.

Yes, Yes, and an amen.

I tried to explain the point about different scores depending on who is pulling it.  You explained it much better.  This is strange but it is true.

Credit scores can and do change.

Online is up to 950...lenders to 900; easy as that...different scales for sure!  Online is not reliable.

Jeff my question is this....why are Realtors asking a potential buyer what their credit score is?  You are right there is more to the picture than the score so why do Realtors think they can advise a buyer and be the judge of credit.  Refer the Buyer to a loan officer and let that LO do the job and determine the criteria then go show property!  It is not the Realtor's determination, the LO may have programs that will approve a variety of credit scores

Jeff,

It's a gret post.

May I add?

It's best to meet with your Agent and LO togeather the first time!

Score alone is no longer enough. The number and types of debts creating those scores can invaladate even the higest scores.

Things on the report that don't affect the score such as NSF checks can be stoppers.

It's not on the credit report, but it's not enough to have the required cash, the cash itself must be accable.

It's the same with your income! Strange things happen. I had one young man with 9 employers in 6 months, yet he never changed jobs! His employer was sold 5 times and reorganized the only thing he knew was there was often a new name on his pay check.

The property has to be acceptable, this can be more than just appraising! FHA condos have been a real mess since 1-1-11! Recent flips can be a problem. Listing agents often have no idea about title issues.

The O & A has to fit the loan program!

Pre-qualifying leaves allot unanswered, pre-approvals cure some of the problems, but still leave allot to be determined! No matter what HGTV idiots do most buyers can go over their budget 5, 10, 20, 30, 40 or 50%!

As to showing houses before meeting a LO, we'd all show one to meet the client, but show a second tells us the agent has no self respect and is most likely incompetent.

LO's and agents working together can do miracle's!

Bill

Great Post! and so very true. Same thing happened to me a couple of weeks ago. A local realtor wrote an offer on a customer that had great credit scores! He even had a copy of his credit report to prove it. Little did she know, he had a heft alimony and child support obligation that kept him from being able to afford the price range of houses he had been looking at for weeks. Always recommend that a buyer speaks with a Mortgage Loan Professional before wasting any time showing houses they may not qualify for!

since we cannot use the bureau the consumer pulled it wouldn't matter what the scores were. also when a potentil buyer says they pulled their own scores i always ask when? some of the answers aren't that funny, or maybe they are.

I agree the credit score is only one piece of the qualification process.  Granted without the score, it is impossible to get loan approval.  As more and more lenders are increasing the overlays on underwriting criteria, even a good score doesn't guarantee approval.

Jeff - Thank you for sharing detailed quality blog about good credit scores could equal ticking time bomb bam.

This is great information! I have found that when I pull credit, the scores are much lower than the scores that borrowers are pulling themselves. So, I always let realtors know that you cannot rely on the accuracy of the self scoring products.

Nice post, it's true that buyers think that the regular retail consumer report they get is worth a lot more than it really is when we pull the mortgage version. But good information like this does find it's way out into the community and help spread the word that it's an indicator but not the whole story.

Jeff, This is so true. Both on purchases & refinances many people assume they are "good" and then there is always a hidden suprise at the last minute. We as loan officers are the ones left to be the super hero of the transaction and find a solution when someone hasn't done their part.