Florida Mortgage News

Has your FHA, VA, or Conventional loan been turned down?

July 31st, 2017 3:02 PM by Gerald Bliss

Has your FHA, VA, or Conventional loan been turned down? 

What do you do now? Should I give up on my dream of home ownership or try again with someone else?

There are many lenders out there. So, what are the differences? Why did your loan get turned down? Why should I try anyone else? I'm going to address these questions that you have been forced to ask yourself. 

There are many differences between lenders. That's why we have 17 lenders under our roof at Bliss Mortgage. Every lender has overlays whether they tell you or not. Without getting too technical, an overlay is a rule or condition that the lender may have in place in order to strengthen the loans they underwrite and service and to reduce the risk of default by their borrowers. Some lenders may want credit cards paid off and closed in certain situations. Some lenders may require certain judgments or derogatory accounts to be paid off. These items may be required by the lender, but may not be required by FHA or Fannie Mae are called overlays. Some lenders may require higher minimum credit scores. FHA guidelines state that in order to qualify for a 3.5% down payment for FHA, the minimum credit score is 580. Lenders will impose a 600, 620 or 640 minimum credit score in order to reduce the risk of a loan going into default. Credit score is not the only factor when underwriting a loan, but the less overlays you have, the better chance you have to close your loan and get the keys to your new home. According to investopedia.com, overlays prevent mortgages. Click here to read the article. These rules or conditions may cause your loan to be turned down-and at times, just a few days before closing. This can be devastating for someone who's already been emotionally attached or committed to purchasing a home and may feel that there's nowhere to turn to once they've received this news. 

Don't worry - there's still hope. What you need to do is find a lender who has no overlays. I mean absolutely NO OVERLAYS. A lender with no overlays will go by FHA, VA, or Fannie Mae underwriting guidelines only, and will not have added conditions for your loan. Luckily, you've come to the right place. We're experienced in closing loans others can't. We've helped many families reach their goals. 

If you or your buyer (if you're a realtor) have had an FHA, VA or Conventional loan turned down, contact us to get a second opinion. You may still be in the market of purchasing or refinancing your home. Don't let another lender kill your dream of home ownership. Let us help #FundYourBliss. 

Gerald Bliss