Don’t Take No For An Answer On Your Mortgage
With the recent credit crunch for real estate and changing lending standards being enforced some people are finding it harder to get mortgages from the places they used to.
Sunday’s Salt Lake Tribune recounts the story of one such borrower.
Max Johns of Salt Lake City should not be having a problem qualifying for a mortgage.
His financial house is in order, and his credit score is well above the minimum most home-loan providers have had in place for years.
But Johns, a construction contractor, is having problems qualifying for a home loan. He’s one of a growing number of Utahns caught up in one of the biggest, swiftest, nastiest shakeouts the mortgage- lending industry has ever seen - one that’s suddenly making it more difficult for many to buy or refinance a home because of heightened requirements.
Sitting in a bank office a couple of weeks ago, Johns was told that although he probably would have qualified several months ago for a real estate loan, he no longer does. “My credit score is only a little bit below what they want now, but they definitely aren’t making any exceptions. It’s frustrating.”
Yes it’s getting tougher to find a mortgage, especially if you have limited work history, limited self-employment history, a lower credit score and no downpayment. However, borrowers needing a refinance or seeking purchase money shouldn’t lose hope just yet. Publicly traded lenders whose stock is being punished by the subprime fallout have been quick to change standards, but there are many lenders out there still willing to make loans.
It’s important to realize the difference between a bank and a broker as a lender. A bank will typically have a set of criteria they adhere to when judging a borrowers application. If it doesn’t fit, it gets turned down. A mortgage broker has access to dozens if not hundreds of lenders with a number of different loan programs. Since the broker doesn’t get paid unless they close the loan, they’ll be more diligent in trying to find a loan that will work for the borrower.
If you need a mortgage loan, don’t give up if the bank turns you down. In fact, if you don’t fit a conforming loan profile, there are not many banks that can fund your mortgage right now. Finding a reputable broker with many wholesale lender relationships is a good step in finding a loan in these more challenging circumstances. Another thing to look for is a broker with an FHA license. This serves as additional vetting because FHA licensees go through a formal screening process.
There are still billions of dollars out there for mortgage loans available right now. It’s a matter of looking in the right place, or getting the right broker to look for you.