Last week we had our monthly staff meeting at Divine Mortgage, LLC. We always discuss guidelines and program changes that effect Albuquerque Mortgage and run scenarios by each other so that we are “in the know”, because these days keeping your skills honed is of the utmost importance.
A scenario I wanted to share was that for a VA (Veteran) Home Purchaser. When he came to our office initially and we took his loan application and ran his credit, he had a “mid score” of 700, which is excellent. Most lenders and investors we work with require a mid score of 620 for VA (government backed loan for active and retired military) programs. We ran AUS (Automated Underwriting) to find out what documents we needed to collect and he and his Realtor went about looking for his new home.
Three months later, he had found his dream house. Of course by that time, we needed to update his credit report, as they are only good for 90 days. We did that and found that he had paid and closed all of his existing credit tradelines (credit cards and loans) and he no longer even had A Credit Score! At all! This was unusual, but we called up an underwriter to ask how to proceed.
What we found out was this;
If you have a VA client specifically, who has no credit score it is a game changer. Instead of relying on AUS (Automated Underwriting) and going off those “approve eligible” findings, and collecting whatever documentation is necessary (btw, you can have incredibly high DTI (debt to income) percentages as long as AUS approves it), we now had to allow the Underwriter to perform what is called; “A Manual Underwrite” where she or he will adhere strictly to the guidelines set forth by The Veterans Administration, and the borrower can no longer exceed the program DTI guidelines of 29/41. 29 stands for the percent of total gross monthly income that can be used for prospective housing expense. 41 stands for the total debt a borrower can have in relation to their total gross monthly income and includes the monthly projected monthly housing expense.
This Albuquerque Mortgage scenario is provided to Realtors and Consumers for educational purposes, and as we well know, program guidelines are ever changing.
Check back next Thursday for more Albuquerque Mortgage info from Melinda Potcher and as always, feel free to contact me with your Albuquerque Mortgage questions.
Potcher is celebrating her 20th anniversary in the Real Estate Industry in 2012.