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How to qualify a weak buyer

By
Real Estate Agent with Coldwell Banker Cascade Real Estate

First have a lender that knows his/her business. Recently I had a buyer that had some money but a credit score 0f 598/625/633. They had several lates last year and one this year. Also a backside ratio of 55%. There were good reason for all and even with the ratio their living style would allow the payment. So here is what we did. With 10% down and 3% for closing costs they still fell into FNMA Level II. With a little work we got them into Level I (.755% lower rate). First we increased the downpayment from 10% to 11%. Next we reduced the cash for closing costs from 3-2% and asked seller to pick up the difference. We then had more $$ in the bank... enough to demonstrate 2 mos payments in reserve. We also paid off two credit cards which had small balances but the resulting payments brought the backside ratio down a little. Buyer is very happy, seller is happy and the mortgage guy and me the Realtor are also happy.

Nothing shoddy or shady. But also might not work for everyone... this buyer had some cash... still the buyer would have taken the higher rate... now they don't have too.

Posted by

Perrin Cornell, Broker, ABR

Century 21 Esclusively

135 N. Missin

Wenatchee, WA 98801

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Comments (10)

Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru
Great way to get through it, but why not look at a down payment assistance program and leave even more cash in the buyers account. Maybe then it goes approve eligible and even a higher right. Course not sure if you have DPA progroms in WA. Either way, great job on closing the deal. Knowledge is power.
Sep 22, 2007 12:45 PM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES
Daniel... so take the air out of my sails...lol. You are correct... never thought of that. We were trying to close fast so not sure if that would effect.... hmmm. Very good point. Learn something new every day!
Sep 22, 2007 12:53 PM
Wayne Miller
San Diego, CA
I like the idea you've taken the time to work with this buyer. 
Sep 22, 2007 12:54 PM
Faith LaRosse
Springer Realty Group - Limerick, PA
Serving Berks, Chester & Montgomery Counties

Nice work, Perrin! I'm sure your buyers are very appreciative of your patience and your hard work...I'll bet they're singing your praises to another potential buyer right this second!;)

Faith LaRosse

Sep 22, 2007 01:09 PM
Geordie Romer
Windermere Real Estate / NCW - Leavenworth, WA
Serving Leavenworth, Lake Wenatchee, and Plain
Sometimes the answer to the affordable housing issue is just learning how to play the game. I'm not saying that housing prices aren't crunching some people, but there are others who can be helped with a little bit of expert manuvering. Nice Work.
Sep 23, 2007 02:47 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Thanks Wayne, Faith and Geordie.

Geordie makes a very good point. MOST people can get qualified with a little work... and perhaps a few months... but it often can be done. Not just qualified for a rip off either. With recent events who wouldn't want a buyer that can make a 3% down (FHA) or more and can actually pay a few closing costs... we have lots of tools around... but we gotta look. There are many mtge brokers that are like many Realtors in that over the last few years they got a little lazy and didn't work quite as hard as they could have and merely pushed a deal through

Sep 23, 2007 03:52 AM
Darel Ansley
Peoples Bank - Wenatchee, WA
Perrin, great work. I think your understanding of the automated underwritng systems is crucial. A lot of people wouldn't think of taking some of the cash to pay down the other debts, or trying 11 vs 10% down.  I hope your client appreciates the extra time you put into this to save them a lot of money.
Oct 04, 2007 05:38 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
Some people do not realize that there is something between 10% and 15%.  If a person does not qualify with 10 % they think they do not qualify. Good post.
Oct 04, 2007 11:40 PM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Darel, thanks for the comment. I know that you are the kind of lender that looks under the rocks so to speak to make it work.

Thanks for taking the time Gita

Oct 05, 2007 01:09 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

And the end result....

We closed 10/18 (28 days) could have closed sooner but it took the sellers an extra week to fix a couple of items in one of the addendums. Also closed at 6.5, 30yr fixed.

Oct 19, 2007 03:04 AM