Good Credit (and a good Broker) is like Money in the Bank

Mortgage and Lending with Henry J Daniels (936) 228-1944 NMLS #209419

There is a saying "Good Credit is like Money in the bank" and today that is the operative phrase today. With the Fed poised to raise rates, lenders tightening their requirements and risk pricing adjustments being added at every turn it is becoming every borrower's responsibility to not only know their FICO scores but to know what is in their credit report and to constantly police it for errors.

Even FHA, VA, USDA and Alt-A lending programs are getting tight. Last week many lenders raised their minimum FICOs for these and other goverment programs from 580 to 620 overnight. While this is not for every lenders the minialist mentality of just getting in under the wire can and does get you burned. I estimate the minimum FICO requirements for conventional loans are increasing by roughly 10 points per month. If borrowers are under the belief that what is good today will be good next month they are sadly mistaken.

Stated income programs for Self-employed borrowers are not almost universally available to those with 700 FICOs or more. So having good credit is no longer the laughing matter it once was. Sadly many lenders, realtors and borrowers participated in the feeding frenzy that was the subprime lending. I won't belabor the point here but everyone had some degreee of blame no matter how you slice it.

That leads us to as a realtor I've got a borrower whose loan just died and I'm out my commission so what do you do now? Your choices are:
A. Jump out a window
B. Scream and jump out a window
C. Have your borrower go to an A-Paper Bank and try and see if the loan sticks and extend the contract
D. Dump your client and go find another one
E. All of the above

Sadly most realtors just do and think E. Unfortunately this results in putting realtors right next to used car salespeople in the love to hate department. For those who will not only survive but prosper in this environment another option must be brought to bear and that is common sense.

One of the first things that I've noticed in recent months is realtors pushing borrowers to sign contracts before they are pre-approved vs pre-qualified. The difference is that generally pre-approval is a review by an underwriter of a full file that is submitted (sans a sales contract) and then issue a judgement based on that.

If you are a either a borrower or a realtor you have to ask yourself do you want a peice of paper that has no meaning whatsoever that you will or ever could get a loan? Then you spend weeks looking for that home only to find out that you either can't get the loan or there wasn't a snowballs chance in a very hot place of you getting the loan to begin with. All is required is patience and common sense.

Work with a lender that will take the time to get you a fully underwritten pre-approval not a pre-qualification that has about as much weight as a feather in a room full of lead bricks. I'd be interested to hear some of your tales good and bad around this subject.



Posted by

Henry J Daniels, Senior National Mortgage Banker for Goldwater Bank N.A.  he specializes in educating clients on the new realities of today's mortgage lending market and providing solutions to all of your home financing needs.  

If you need Custom Home Construction, Rehab, FHA, VA, USDA, Conventional, Jumbo or Construction mortgage Nationwide he can help you understand all of the options available and provide you with true financing choices.  

You may contact him at (936) 228-1944

  Copyright © 2017 Henry J Daniels

The views expressed are mine alone and do not necessarily reflect the views of any company I may work for.

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