Home Buyers Find Success With Loan Re-Applications
When your mortgage loan application gets turned down, there’s a really good reason to talk to another lender instead; Updating today’s mortgage rates and mortgage rate trends; and, Shopping for interest rates and closing costs as a package is pretty much impossible.
Mortgage Overlays Are Your Lender’s Made-Up Rules
Getting a mortgage approved can depend on the lender with which you apply. One mortgage lender’s denial is another’s strong approval.
It’s because of Investor overlays; and, when a mortgage loan gets denied, it’s good sense for borrowers to re-apply for that loan somewhere else.
Investor overlays are an additional set of mortgage qualification standards imposed by a lender, beyond what’s a mortgage program’s official guidelines require.
Examples of investor overlays include:
- Raising minimum credit score requirements on a loan by twenty points
- Reducing a borrower’s debt-to-income ratio by a certain number of percentage points
- Increasing a home buyer’s waiting period after a short sale or foreclosure event
Investor overlays are especially common with FHA loans.
According to FHA loan guidelines, a home buyer can get approved for an FHA mortgage with a credit score of at least 500. But, finding a lender that allows a five-hundred score can be a challenge.
Mortgage lenders tend to enforce an FHA credit score overlay that raises minimum FICO requirements as high as 660. Loans with credit scores below that are denied at the point of application.
If that’s you, don’t stop looking for that FHA-backed loan. Overlays vary between lenders. You might get approved somewhere else.
Government data shows that 1-in-5 mortgage approvals are made after an initial mortgage turndown. Don’t let a denial set you back.
Re-apply for your loan with a different mortgage lender.
Today’s Mortgage Rates & Trends
Mortgage rates are headed higher this Monday morning.
The actual rate you get from a mortgage lender will vary based on how much you borrow, the state in which you’re borrowing, and your credit score.
Your mortgage loan type makes a difference, too. Here’s how today’s interest rates are moving:
- Conforming mortgages: Higher
- FHA mortgages: Higher
- VA mortgages: Higher
- USDA mortgages: Higher
- Jumbo mortgages: Higher
Mortgage rates are personalized based on you, your home, and your days-until-closing. Don’t expect the same rate as your neighbor and don’t overlook the importance of getting a second option.
Studies prove that mortgage borrowers save money when they talk to two or more lenders. Statistically, you’ll reduce your costs up to $2,000 when you talk to a second mortgage lender, and those savings increase when you talk to a third, fourth, and fifth.
So, shop around and make sure you get your best combination of service, rates, and fees.
Get Today’s Mortgage Rates
Shopping For Mortgage Rates Or Closing Costs, Not Both
Studies show the importance of getting mortgage rate quotes from more than one lender. And, instinctively, we understand why.
Comparison shopping saves money, and when you’re dealing with something the size of a mortgage loan, that potential to save takes on added import.
But, simply calling two or more lenders won’t give you the savings that you’re after. You have to know how to comparison shop and comparison shopping a mortgage is a learned skill.
So, start here: which is more important to you?
- I want the lowest mortgage rate I can get
- I want to pay the fewest mortgage closing costs possible
Knowing which affects you more — mortgage rates or closing costs — is important because rates and costs move in opposite directions; it’s why paying discount points gets you access to lower interest rates.
When you insist on having today’s best mortgage rate, then, you know you’re going to pay higher costs. And, when you’re comparing mortgage lenders, it helps to be aware of what’s driving your decision.
Knowing what matters more — rates or costs — allows you to reduce the number of variables you’re working with from two to one.
You’re not comparing rates and fees. You’re comparing rates or fees. Decision-making like that puts you in control.
When you know you want a zero-closing cost mortgage, you can have your competing lenders tell you their rates with $0 fees whatsoever.
That’s a fair comparison.
Same for when you want today’s best rate. Tell your lenders the rate you wish to have, and let your lenders tell you the closing costs to expect. That’s how buyers compare lenders fairly, quickly, and easily. And, without overpaying for their loan.