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Raising Your Approvability Quotient

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Mortgage and Lending with LINCOLN MORTGAGE

Your 'Approvability Quotient,' as I like to call it, depends on the strength of your credit and employment histories. As I mentioned in last week's post, the underwriter looks at your whole picture. Have you been renting, and if so, have you paid it on time? Simple laws of probability indicate that if you pay your rent on time, you're likely to do the same with your mortgage payment.

If you've not been renting, and have been living with family, I would suggest that any board you're paying should be in the form of a check. A track record of 12 months' consecutive board checks can be used in lieu of a rental history. Now please note, it can't be on again, off again. I wish I had a nickel for every applicant that told me they could document 12 months, only to find that they had maybe seven months' cancelled checks, one or two money order receipts, and the other months "We must have paid them cash."

This is not the consistent proof that the underwriter is looking for. When I try to build your case, its almost like I'm an attorney defending you to a jury; in this case a one member jury, the underwriter. Now, bear in mind, contrary to popular belief, an underwriter is not looking for reasons to decline your loan. If they reject too many loans, the mortgage business slows, and less closed loans means that less income flows into the company. If you think about this, an underwriter that denies too many loans is actually paving the way for his/her own layoff!

BUT, having said that, an even quicker way to that underwriter's layoff is approving questionable loans. Should an approved loan default, the file is reviewed to determine whether or not it should have been approved in the first place. If it is deemed that the underwriter overlooked ifactors that could or should have indicated that the loan would default, he/she is called on the carpet. The last thing a mortgage company wants is to have to buy a loan back. The profit margin is so small on the average closed loan that one buyback can negate the income from dozens of closed loans.

This is why your 'Approvability Quotient' is so important. I've had potential buyers tell me, "I don't think I'd be approved for a mortgage, I was just turned down for a credit card."

Two months later these people were home owners. Part of this is due to the fact that credit card and mortgage companies use very different processes to make their determination on your credit worthiness. The rest is due to my ability to position my clients so that the underwriter says,

"THIS LOAN IS APPROVED!"

More on upping your APPROVABILITY QUOTIENT in my post next week.

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