Stated loans are available in this real estate market, however they are not available to 100{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c}, but rather 90-95{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} at a maximum. Until lenders can properly assess risk again, this is what we have to work with. Along with the recent reduction in loan o value offered, also comes the requirement of having a higher credit score to qualify. Gone are the days of 100{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} financing stated income with a 600 score. Now it is very common for the qualifying credit score on a stated loan to be at lease a 680.
With the revolving need for borrowers to purchase and refinance, the process still needs to be streamlined for our clients, so we as mortgage brokers can be more resourceful. Every mortgage broker should have access through their credit reporting agency, to a credit analyzer, and also a quick re-score mechanism to aid their clients in getting qualified for a stated loan in this case.
For example, a cable satellite installer comes to my office, and wants to buy a home with his fiance. All of his income is 1099, and he is contracted out with various employers. He has a lot of deductions, and cannot prove his $50,000 a year income.This is a stated loan, and we run his credit to find out her has a 650 score. We need a 680. Many mortgage brokers will automatically refer this client to a credit repair company,which can take months for them to do anything that will increase the score, in addition to charging the client a high monthly fee. Stay away from this option, and only use it as a last resort. Last resort meaning the client wont be buying for 12 months, and putting him into credit repair will organically work over time. However in this case, our borrower wants to buy in the next 30 days, and he needs a 30 point boost in his credit repair.What do you do?
Every good credit reporting agency will have built in features to help raise your clients credit score. The first is a credit analyzer. It will cost about $7 to run, however will save your borrowers additional hundreds of dollars if done correctly. Basically you plug a target score, in this case, 680, into the system for the borrower. The analyzer will then run the system, and tell you exactly what you need to do , to get that score to a 680.
For example, he has a capital one card with a $2000 limit, and he owes $2000. If we pay the balance down to a 35{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} debt to limit balance of $700, his score will get the additional 30 points. The engine states that revolving credit will be increased, and that makes him look more solvent. My borrower will need to pay Capital One $1300, and then get a letter from Capital One to state the new balance. If done organically, this process can take up to 90 days, as the creditors take their time updating with the credit bureaus. The letter is evidence for me to use to put in a quick rescore submission.
The mortgage broker will take the letter, along with a fee of usually $30 per bureau, in this case $90, for Transunion, Eqifax, and Experian. We submit this with our letter to or credit reporting agency, who will update this with the bureaus within 5 business days.
You just saved your clients additional months of waiting, so they can move into their home in 30 days. Being resourceful as a mortgage broker in this market is priceless.
