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Buyer frustrated over the mortgage process in Key West Florida.

By
Real Estate Agent with EB Realty
Mortgage paperworkBuyers are becoming frustrated with the mortgage process. Many buyers cannot get credit because of the tight credit market. Over 2 million people were turned down last year according to the Federal Financial Institutions Examination Council.

The most common reasons for rejection are: 

1. Bad Credit scores are now between 620 and 660. The bank usually says no to thee buyers automatically. 

2. Not enough income. This is a no brainer and will never change.

3. Paperwork glitches. Missing forms, incomplete information on the application can slow or stop the process. 15% of of application are slowed down because the buyer did not complete the application correctly or provide proper documentation. 

4.  Homeowner Association issues. 

5. Problems in the neighborhood. If the neighborhood is in decline. broken into distressed homes with major repairs needed are often a black mark on the appraisal.

6. Appraisals. If the home doe not appraise the banks won't lend. 

7. Bank Conditions. Underwriters all want something different. Each bank has a different set of rules and documentation requirements. 

8. Gaps in employment history can wreck havoc on a buyers chance of getting a mortgage. Overtime income must be consistent and documented. Even rental income is scrutinized. 

9.  Discrepancies in tile work, contracts or name inconsistencies. Paperwork

These are all obstacles that can be overcome in time. When getting ready to buy a house you must seer a lender as soon as possible. Going into see a lender prepared with 2 years of tax returns, 2 months of bank statements, 2 pay period pay-stubs and a willingness to get what is necessary for your lender. Happy Homeowner
Posted by

Elizabeth Birmingham

Grand Junction Homes www.AskforElizabeth.com

Selling Homes in Grand Junction, Colorado 

970 464 1000 in Colorado

 

Comments (4)

Faith LaRosse
Springer Realty Group - Limerick, PA
Serving Berks, Chester & Montgomery Counties

Sounds pretty similar to our area, too---

Oct 15, 2011 10:41 AM
Alan Grizzle
Chestatee Real Estate - Dahlonega, GA
Full Time Realtor, Lifelong Resident of Dahlonega

We have went from way to easy to get a loan to way to hard to get a loan. I hope we get to the middle ground soon.

Oct 15, 2011 10:42 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

It is much more difficult than it needs to be and takes much to long. many of the underwriting guidelines are just plan stupid.

Oct 15, 2011 11:13 AM
Rodney Mason, VP of Mtg Lending
Guaranteed Rate NMLS# 2611 - Atlanta, GA
AL,AR,CA,CO,FL,GA,IN,MI,MS,NC,SC,TN,TX,VA

Many of the issues that you mentioned are there for very valid reasons. 

1. Bad Credit scores are now between 620 and 660. The bank usually says no to thee buyers automatically. This is really not a true statement.  Most FHA/VA/USDA loans require a 640+ FICO.  For FHA, we do offer a 580-639 FICO program.  With a 20% down payment, conventional mortgages for a primary residence will go down to 620+. 

2. Not enough income. This is a no brainer and will never change. You are 100% correct.  If sufficient income to support the mortgage payment cannot be documented, then the mortgage cannot be approved.

3. Paperwork glitches. Missing forms, incomplete information on the application can slow or stop the process. 15% of of application are slowed down because the buyer did not complete the application correctly or provide proper documentation. Incomplete applications become a big challenge for all. When buyers only supply a few pages of a document, that is not acceptable.  Some do not understand the importance of getting everything in ASAP.  All non payroll direct deposits must be explained and documented.  Very often, they have not kept proper copies of what is needed.

4.  Homeowner Association issues. Only on condos, do HOA issues really pose an problem with the mortgage approval.  Condos go through a more stringent approval to better examine their overall stability since it impacts every owner in the project.

5. Problems in the neighborhood. If the neighborhood is in decline. broken into distressed homes with major repairs needed are often a black mark on the appraisal. Only the subject property would really be directly impacted if repairs are needed.  Homes in severe need of repair that have closed would generally not be used as comps for an appraisal.

6. Appraisals. If the home doe not appraise the banks won't lend. The maximum loan to value is based on the lesser of the sales price or the appraised value (only USDA and renovation loans used the only the appraised value).  The seller and buyer can always renegotiate the transaction based on the new value.

7. Bank Conditions. Underwriters all want something different. Each bank has a different set of rules and documentation requirements. Lender overlays are very common in today's market.  Some are simply much tighter than others.

8. Gaps in employment history can wreck havoc on a buyers chance of getting a mortgage. Overtime income must be consistent and documented. Even rental income is scrutinized. If the borrower has a 6+ gap in employment, then they must currently be employed for at least 6+ months before the income can be used for qualifying.  Bonus/overtime/commission income, must be received at least 12-24 months before it can be used.  Expenses claimed on tax returns are also deducted from the income.

9.  Discrepancies in tile work, contracts or name inconsistencies. Paperwork This is where agents need to be very careful when writing a sales contract.  Pull the USPS for the address so that its 100% accurate.  Make sure that the buyer's correct legal name is used.  Don't put Bobby or Maggie on the contract if its really Robert or Margaret.  I see addendum all of the time changing names because the agent didn't ask first and use the buyer's correct legal name.  For the title commitment, the closing attorney will use the names exactly as they appear on the sales contract.
 
With the tightened lending standards of today, the loan quality has substantially improved.  That will lead to more stability in the long term. 
Oct 15, 2011 03:42 PM