Manual Underwriting Texas Texas mortgage Lender Approvals!
When the Texas Texas mortgage applicants information is entered into what’s called an Automated Underwriting System, or AUS. This is basically a computer program that helps streamline the Texas Texas mortgage application process and let Texas Texas mortgage Texas Texas mortgage lenders know at the outset whether a borrower will meet credit and income requirements. Texas Texas mortgage loan applications that receive an Automated Underwriting System approval can allow Texas Texas mortgage lenders to proceed with fewer documentation requirements.
TEXAS Texas mortgage AFTER BANKRUPTCY, FORECLOSURE OR SHORT SALE.
What are the qualifying ratio requirements for manually underwritten Texas Texas mortgage loans?
Maximum qualifying ratios for Texas manually underwritten loans are determined according to the lowest minimum decision credit score and compensating factors.
Lowest Minimum Decision Credit Score 500-579 or No Credit Score: 31/43 (Energy Efficient Homes may have stretch ratios of 33/45)
Lowest Minimum Decision Credit Score 580 and above: 1. 31/43 (Energy Efficient Homes may have stretch ratios of 33/45
• Verified/documented cash reserves equal to or exceeding 3 (1-2 units) or 6 (3-4 units) total monthly Texas mortgage payments.
• Minimal Increase in Housing Payment
– There is a documented 12-month housing payment history with no more than one 30 day late payment. In cash-out transactions, all payments on the Texas mortgage being refinanced were made within the month due for the previous 12 months.
– May not be used as a compensating factor if the borrower has no current housing payment.
• Residual income
3. 40/40 – No Discretionary Debt:
• Texas borrower’s housing payment is the only open account with an outstanding balance not paid off monthly; and
• The credit report shows established credit lines in the borrower’s name open for at least 6 months; and
• Texas borrower can document these accounts have been paid off in full monthly for at least the past 6 months.
4. 40/50 – Requires 2 of the following Compensating Factors:
• Verified/documented cash reserves equal to or exceeding 3 (1-2 units) or 6 (3-4 units) total monthly Texas mortgage payments.
• Minimal Increase in Housing Payment
– There is a documented 12-month housing payment history with no more than one 30 day late payment. In cash-out transactions, all payments on the Texas mortgage being refinanced were made within the month due for the previous 12 months.
– May not be used as a compensating factor if the borrower has no current housing payment.
• Significant Additional Income (Overtime, Bonuses, Part-Time or Seasonal Employment) Not Reflected in Effective Income
– If it were included in gross effective income, is sufficient to reduce the qualifying ratios to not more than 37/47.
• Residual income
But there are certain circumstances that can shock an application to a Refer/Eligible that requires manual underwriting. Examples include:
- Texas Foreclosure, short sale or deed-in-lieu of foreclosure
- A lack of credit depth or history
- A bankruptcy in the last 24 months
- Default or delinquency on federal debt
- Late Texas mortgage payments
A Texas Texas mortgage application that gets bounced from the automated system may be eligible for a manual underwrite. All this basically means is that a human will have to review the file and crunch the numbers and evaluate the risk. In addition, when facing a manual underwrite you will likely need to meet tighter Texas Texas mortgage requirements when it comes to things like debt-to-income (DTI) ratio, residual income, derogatory credit, financial documentation and more.
We Provide Texas Texas mortgage manual underwrite approvals!
Many Texas Texas mortgage applicants ask u what is a “manual underwrite” Texas mortgage loan and what is needed to get a manual underwrite Texas Texas mortgage approved?
It’s important for both borrowers and Texas Texas mortgage Texas Texas mortgage lenders to realize what it means when a Texas mortgage loan officer states that a loan requires a “manual underwrite”. Some FHA Texas mortgage Texas Texas mortgage lenders don’t completely understand what it means in depth, so let’s start off with the basic definition of what a manual underwrite actually means when it’s applied for FHA or VA Texas mortgage underwriting.
Almost all FHA and VA Texas mortgage Texas Texas mortgage lenders including the large banks you walk use “automated underwriting systems” (AUS) to help them correctly underwrite or approve Texas mortgage loans. These complex software systems were developed by Fannie Mae, Freddie Mac, and USDA. The software systems developed by Fannie and Freddie are used for conventional conforming loan approvals including approvals for FHA, VA, USDA loans. So here is the process:
An FHA or VA Texas Texas mortgage lender will upload (or manually enter) all loan application data and and reissue your current credit report into into the appropriate software system and then “submit” the loan to the automated underwriting systems” (AUS). Within or about less than 1 minute if your Texas Texas mortgage loan is “ELIDGIBLE” the computer system will provide 1 of 3 answers If the loan is “INELIGIBLE” then it can’t be done and the buyer / borrower will probably need to find some type of non-conforming (portfolio or hard money) type of loan.to your loan request. The result will either state “Approve”, “Accept”, or “Refer”.
Here are some examples of the most common three possible responses for an ELIGIBLE loan:
- “Approve/Eligible”
- “Accept/Eligible”
- “Refer/Eligible”
Assuming the loan is “Eligible”, then there is a second response that indicates the level of underwriting “scrutiny” required.
3. “Refer/Eligible” is what will spark the lender to need to perform a manual underwrite. Many Texas Texas mortgage lenders DO NOT even offer the service of performing manual underwrites because they require additional work and are more prone to audits by Fannie Mae, Freddie Mac, or Ginnie Mae. Many manual underwrite Texas Texas mortgage lenders offer manual underwrites, but most of them prefer to only offer this service on government loans (FHA, VA, or USDA). Very few Texas Texas mortgage lenders will offer a manual underwrite on a conforming conventional loan. We offer manual under wring approvals.
Now we will go over what is most likely going to be required if your loan is going to be manually underwritten. The “Refer” part of the computer response simply means that a human being must manually “refer” to the entire guideline handbook (depending on the type of loan) to “manually” make sure it meets all guidelines, which obviously requires more time and analysis.
There are
MANUAL APPROVAL WITH COMPENSATING FACTORS
Compensating factors. These are simply “good parts that offset the bad parts” in your loan request. Some compensating factors include:
RENTAL HISTORY- For Texas Texas mortgage underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see proof of timely rent payments for the past 12 consecutive months. If you pay by check, then the loan officer will ask for 12 months cancelled rent checks (front and back) If you pay by automatic withdrawal then the loan officer will ask for the past 12 monthly bank statements that show the dates of each rent withdrawal. In addition, Texas Texas mortgage lenders may even have a 3rd party call the landlord or property management company to verbally verify timely payment history as an extra layer of proof (especially in cases where people pay by check but there are significant lags between the check date and the deposit post date).
RESERVES- For manual underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see reserves. Reserves is defined as future monthly Texas mortgage payments in your account after closing. money that you’ll have left over after buying or refinancing a home. The best types of reserves are the most liquid (checking, savings, money market accounts). Reserves can also be retirement accounts, stocks, bonds, etc. but you’ll need to prove that you can actually access the money in such accounts (often a 401(k) will have a handbook that stipulates when and how much money any employee can actually withdrawal or borrow from the account– the loan officer will need this handbook if you want to be able to “count” a 401(k) account).
DOWN PAYMENT- For manual underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see that you have skin on the game. For FHA loans, the minimum down payment is typically 3.5%. If you can put down 10% then not only would this be considered a HUGE “compensating factor”, but also there are multiple benefits regarding when you can cancel FHA Texas mortgage insurance if you put down 10%.
PAYMENT SHOCK- For manual underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see your new payment inline with your current rental history. Whether you rent or own right now, if you can prove that you’ve been capable of making such a payment on time for the past 12 months AND the new proposed payment is not much larger than your current monthly housing payment, then this is a HUGE compensating factor because it proves that you’ve been capable of handling this payment range over the past 12 months without being late. Here is a trick to “count” this as a compensating factor EVEN IF your new proposed monthly payment will be significantly higher: Take a look installment loans such as auto loans. If, perhaps, your new housing payment was going to increase from $700 in rent to $1,100 per month for the Texas mortgage and you have a $400 monthly car payment that is almost paid off, then point that out! Essentially, you have proven that between the rent and the vehicle loan, you’ve been paying $1,100 on time each month, and if that vehicle payment only has a few months left then there is no reason that the (now paid off) vehicle shouldn’t allow you to now handle the $400 increase in your housing payment. This is something that often loan officers even forget to analyze and point out.
INCOME – For manual underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see Income that can not be “counted” for underwriting purposes.There is typically income that can’t be “counted” for underwriting purposes, but may be considered a “compensating factor”. Examples of such income can include child support or alimony that is received, but not always on time or for the full amount ordered by the judge, non-borrowing spouse income (a spouse that is not on the loan, but has a job), income from a second job (typically you can’t “count” income from a second job unless you’ve had it for at least two years), or self-employed income that has not been received for two years. Use your imagination to come up with additional compensating factors after reading these examples.
Job stability and /or likelihood for future wage increases.Texas mortgage Texas Texas mortgage lenders love it when employees have worked for the same employer for a long time, as they generally much less likely to be fired or laid off and more likely to receive raises. Additionally, Texas mortgage underwriters actually consider the company and industry that your employer is in. A small independent medical insurance brokerage is less likely to be in business and retaining their employees than a company that’s made the Dow 30 index (such as Boing, General Electric, AT&T, etc.).
NON TRADITIONAL CREDIT HISTORY- For manual underwrite approval Texas Texas mortgage Texas Texas mortgage lenders love to see “non-traditional” credit accounts to be added to the credit report to show timely payment history for at least 12 months. For no credit score home loan approvals these non traditional credit history are r required. If the borrower has less than three accounts with a 12 month history of timely payments, then many underwriters will require that the borrower document timely payments on other bills. The best types of accounts are “housing-related accounts”, such as utilities, renters insurance, cable TV, internet, etc. Other acceptable accounts can include auto or home insurance payments, mobile phone, storage unit, etc.The idea is to gather more data to determine a given borrower’s willingness / ability to make timely payments. Again, this only applies to borrowers that have very few accounts that show up on their credit reports.
Keep in mind that if you are facing a manual underwrite, it’s usually due to poor credit or a high debt-to-income ratio. Most Texas Texas mortgage lenders will want to see a housing ratio (Texas mortgage payment + Texas mortgage insurance + home insurance + property taxes + homeowners association dues on a monthly basis) / (gross monthly income) around 31% and your debt-to-income ratio (“DTI”) at 43% or less (this is the same calculation except your “debt” includes all other payments such as minimum credit card payments, auto loans, personal loans, child support due, etc.). Many Texas Texas mortgage lenders that offer manual underwrite loans will not budge on these ratios, but some will. Generally, with compensating factors, you can get a manual underwrite loan approved with a housing ratio of up to 35% and a DTI ratio of up to 48% at the most, and these Texas Texas mortgage lenders are tough to find.
Elaborate explanations regarding any and all derogatory credit accounts, bankruptcies, or foreclosures. Effort COUNTS on such letters, so don’t try to cut any corners. Put some time into these letters, proofread them, and the “effort factor” WILL count for something. Typically a manual underwrite is a result of a poor credit history, so this will most likely apply to you if you are facing a manual underwrite.
