Choosing Mortgage Lender With No Overlays On Home Loans

How Do These Financial Institutions Impact My Ability To Attain Financing?

BANKS AS MORTGAGE LENDER

Banks offer residential mortgage loans as well as other financial services. However, most banks have lender overlays on credit, credit scores, collection accounts, charge off accounts, and may require three credit tradelines.

Banks make their money on financial services such as the following:

• Home Loans
• HELOC
• Automobile loans
• Personal loans
• Lines of credit
• Servicing mortgages from the time deposits they get from their customers

Majority of the banks have extremely conservative mortgage lending guidelines:

• Most banks have mortgage overlays beyond those mandated by FHA, VA, USDA, FANNIE MAE, and FREDDIE MAC

For example,  the minimum credit score a mortgage loan borrower needs to qualify for a 3.5% down payment mortgage loan is 580:

• However, most bankers have their own mortgage lender overlays where they will not accept any mortgage loan borrowers with a minimum of a 640
• Mortgage rates from banks are higher than those offered by mortgage bankers due to their high overhead
• Loan officers who work at FDIC Banks do not have to be licensed due to the exempt status on FDIC Loan Officers
• Banks do not have to disclose yield spread premium ( the profit the mortgage lender makes to originate a loan ) due to their exempt status from the government
• Most banks take a longer time to process and underwrite a mortgage loan compared to mortgage bankers 
• Borrowers who need a two-week closing done, a bank may not be the best choice

Choosing Mortgage Lender With No Overlays Is The Best Bet For Borrowers With Less Than Perfect Credit

There are lenders with no overlays on government and conventional loans. Non-Qm Mortgage Brokers is a national five-star mortgage company with no overlays on government and conventional loans.

MORTGAGE BANKER AS DIRECT LENDER

Mortgage bankers are in the business of originating and closing residential mortgage loans and reselling them to Fannie Mae and/or Freddie Mac.

• Mortgage bankers use their own wholesale mortgage line of credit
• Once they fund a loan, they package them up and resell them to the secondary market to relieve their wholesale warehouse line of credit so they can repeat the process
• Not all mortgage bankers are created equally
• Each mortgage banker has its own mortgage lender overlays
• Lenders may have overlays beyond the minimum guidelines set by FHA, FANNIE MAE, FREDDIE MAC, VA, or USDA
• Borrowers who got denied for a residential mortgage loan from one mortgage banker can apply to a different mortgage banker
• Every mortgage banker has its own mortgage lending guidelines
• So if one mortgage banker does not like a particular credit and financial profile, that does not mean another mortgage banker will
• Like banks, each mortgage banker might have their minimum credit score requirements and debt to income caps
• For example, some mortgage banker might not accept any borrowers with a credit score lower than 640
• Other mortgage bankers may take on a borrower with a minimum credit score of 620

Non-Qm Mortgage Brokers is one of the few direct lenders in the country with no overlays on government and conventional loans.

Are Mortgage Brokers Lenders?

Mortgage brokers are the middleman who helps borrowers and match them with mortgage lenders. Mortgage Brokers are not lenders and do not use their own money to fund loans. Borrowers do not have to pay brokers. Mortgage Brokers get paid a commission by direct lenders.

• Mortgage Brokers are the middleman who gets a commission from direct lenders for matching up borrowers who meet a lenders mortgage requirements
• The disadvantage of dealing with mortgage brokers is that they are not lenders so they have no control over the mortgage process

In return, mortgage brokers are paid a commission called yield spread premium by lenders.

• Mortgage brokers normally have a few mortgage lenders with various different mortgage lending guidelines
• Hiring mortgage brokers will be ideal for borrowers with prior credit problems or high debt to income ratios
• Instead of contacting direct lenders themselves, the mortgage broker will often have a database of mortgage lenders
• Mortgage brokers can represent mortgage lenders who have no mortgage lender overlays
• Borrowers who are a rate shopper can hire a mortgage broker where the broker can shop for the best rates in the country
• There are mortgage bankers who are also mortgage brokers

These mortgage bankers will broker a mortgage loan that they cannot do due to their own mortgage lender overlays.

Mortgage After Bankruptcy And Foreclosure

Borrowers who have had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, late payments, outstanding collections/charge offs, or recent late payments, a mortgage broker may be able to help since they can shop for direct lenders that may have no overlays. Brokers can match borrowers with less than perfect credit with lenders.

Borrowers who need to qualify for a mortgage with a national lender with no overlays on government and conventional loans, please contact us at Non-Qm Mortgage Brokers at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.  Over 80% of our borrowers are folks who could not qualify at banks or mortgage bankers due to their mortgage lender overlays.  We are available 7 days a week, evenings, weekends, and holidays.