They may be a "reject" if:

Every day I get calls from my Real Estate "partners" asking me to pre-qualify their customers and send out

a pre-approval letter.  I am always happy to do this, it's my job !

Lately however, I seem to be getting more and more pre-qual requests on customers who simply don't qualify for any type of mortgage financing in todays market. (Ahh, the 1990's, what a decade for mortgage guys)

All conventional mortgages in this country are underwritten using four (4) basic guidlelines that we teach in our classes using the acronym:  I.C.E.A.

I - Income/Debt Ratio

C. - Credit= "Fico Scores:

E. - Equity --The Percentage of the Loan Amount divided by the Appraised Value or More Simply put

                 the Down Payment  =  Loan To Value or L.T.V.

A. - Assets.-- How much money the borrowers have for Down Payment & Settlement Costs.

It's true that there are still mortgage programs out there that will do the "No Income" or "Stated Income"  loan, but the trade off is usually a much larger Down Payment/Lower LTV (70% or lower)

Credit Scoring remains, in most cases, at a minimum of 620-660 range.

Assets -  Cash for down payment, settlement and escrows pretty much ALWAYS has to be verified when the loan is for a Purchase.

Soooooooo, in my never ending quest to educate the real estate establishment on the finer points of mortgage financing, I have put together a small list of some "Red Flags" to look for on a customers application that will give you a big "heads up" that this borrower just won't qualify.

 And so with all proper respect to Jeff Foxworthy, Here is a short list of   "They may be a reject if"

If your customers credit score is lower than his I.Q.-- He may be a reject

If your customer is on a 1st name basis with 3 or more bill collectors -- He may be a reject

If when your customer cashes his pay check at the local quik-e mart, the clerk asks him "how would you

like your cash, heads or tails ?" -- He may be a reject

If your customer needs a co-signer and he says his grandchild will co-sign but he has to wait until June when the kid graduates from high school --- He may be a reject

If your customer lists as an asset his collection of Fred Flintstone Jelly Glasses -- He may be a reject

If the appraiser can take ALL the interior pictures of the subject property with only 2 photos- He may be a reject

If your customer is a "little short" on cash for the down payment but tells you not to worry because he just bought $100 worth a lottery tickets and he's feeling real lucky this week-- He may be a reject

If your customer tells you that she is a "working actress" and that her last job was a guest role on "All in the Family" -- She may be a reject

If your customer is a Public Relations Manager and his ONLY client is Osama Bin Laden-- He may be a reject

If your customer wants to go "stated income" when he is the hot dog vendor at the local high school hockey rink and claims he makes $150,000 per year -- He may be a reject

There you have MY list, if anyone out there can think of others, please post, I'd love to hear from you !

 

Peace, Love, Learn, Grow

Ken Nelson: The Mortgage Sherpa