Buying a house these days can feel like you’re running through a minefield. You finally saved up what you think is enough for a down payment, and your competition is offering $100k over the asking price without an inspection. This isn’t anything like what your parents went through when they bought a house.
Before entering into the treacherous world of home-buying, you should arm yourself with as much knowledge as possible. And that includes mortgage lending exceptions. Keep reading to learn how you can better your chances of getting a mortgage loan.
What Do You Need to Know About Getting a Mortgage Loan?
If you’ve never bought a home before, the thought of applying for a mortgage loan can seem intimidating and overwhelming. This is especially true because the housing market is so expensive. With the prices of homes through the roof, you probably don’t have enough cash saved up to pay for your new home in full, which leaves you needing a bank loan.
When you apply for a mortgage loan at the bank, they’ll look at your income, credit score, and any collateral that you have. There are a lot of other criteria that will be used in consideration for approving your loan application, but those are some of the most important.
Banks usually have guidelines that need to be met in order to get approved for a mortgage loan, such as a certain credit score or the ratio of debt to income that you have. However, mortgage lenders have some wiggle room with who they get to approve.
If your application isn’t as strong as it could be in some places, there’s still a chance that you’ll be able to get your loan.
This is where the mortgage exception process comes into play. If you’re a Millennial with a lot of student debt and you still want to buy a house, mortgage lending exceptions will be your best friend.
What Are Mortgage Lending Exceptions?
A mortgage loan exception is what happens any time a bank’s guidelines are not met, but you get approved for a bank loan anyway. Because housing prices remain high and demand for houses is not slowing down, a lender may have more discretion when it comes to approving you for a mortgage loan.
There are two types of mortgage lending exceptions: policy exceptions and underwriting exceptions.
Policy exceptions take place when a bank’s procedure or policy is not met.
For example, a bank may require that you submit a certain number of tax returns in order to prove income. Say you have three out of the required five years of tax returns. Your lender may choose to disregard the policy that requires five years of tax returns to prove income and approve you based on the information you did provide.
An underwriting exception has to do with the criteria that banks evaluate when you apply for a loan that we mentioned earlier. For example, if your credit score falls short of the bank’s requirement, but you have very little debt, that may be enough to get your loan approved.
What Should You Know About the Mortgage Exception Process?
When applying for a bank loan, mortgage exceptions are only part of the entire process. Once you have enough money saved up for a down payment on a house, you’ll most likely start looking for places where you can get a mortgage loan to finance the remainder of the cost. You should call around to a few different lenders to see if you can get pre-qualified for a mortgage loan.
After you get pre-qualified and find a house that you love, you’ll make an offer on it. When you apply for a mortgage loan, the lender will most likely ask you what you’re going to be offering on the house so they can take that into consideration. There’s a lot of other information that you’ll need so you can prove that you’re a good candidate for a loan.
The lender will lay out the terms of the loan so you can get a better idea of the monthly payments and additional costs that you may have to pay. After you lock in an interest rate, you get to the point where mortgage exceptions come in. It’s only after all of these other steps take place that the lender will determine if you are eligible for the loan you’re asking for and approve or deny your application.
How Can You Improve Your Chances of Getting a Mortgage Exception?
If you’ve applied for a mortgage loan in the past and been turned down, you’re probably already aware of the areas you need to improve on. For example, if your credit score isn’t stellar, you can always work on paying down your debt to reduce your debt-to-income ratio.
We know that lenders have some discretion when it comes to approving your home mortgage loan. However, you’ll still need to convince them that you’re responsible enough to pay them back.
Boosting your credit score and building your credit history are key ways to make yourself a more attractive option for a mortgage exception. Lenders want to feel confident that you are a safe risk to take because, at the end of the day, they’re loaning you a lot of money.
Ready to Apply For a Mortgage Loan?
Are you ready to see what mortgage lending exceptions you qualify for?
To start the mortgage loan process with Supreme Lending, begin with filling out our easy mortgage loan application. It only takes a few minutes and will help get you on your way to owning the home of your dreams.