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An Experienced Loan Officer Will Know When to Tweak and When Not To.

What things give loan officers the idea that while your initial loan request wasn't approved, your loan is approvable? Experience and the ability to look at your loan to see what makes it a candidate for tweaking.

For instance, I had a client who bought investment properties on occasion, about two per year. The first couple of properties he bought went through without a hitch. But the third home he purchased gave me some initial heartburn.

On the third deal, his ratios were much higher, not because rates had gone up, but because his debt ratios had; he had just added two new mortgages to his portfolio, and his total debt ratios were approaching 50 percent. That's high.

I didn't get my loan approval on the first try. It surprised me a little, because this guy was "golden" in terms of loan qualification. Yeah, his ratios were high, but his credit was spotless, with a score of over 800, and he had lots of money lying around in the bank—so much money that if push came to shove, he could write a check for the whole thing, but hey, that's what a mortgage is for, right?

He wanted a 15-year rate and didn't get it. I suggested that he negotiate the price a bit lower, put more money down, or do a combination of both. He attempted to lower the price, but he wasn't successful.

I resubmitted the loan with a 20-year fixed rate under the exact same scenario, except that this time I dropped the sales price from $600,000 to $590,000. His ratios dropped to 47. I resubmitted the loan to the AUS and got my approval. I called my client and told him that I had just gotten his approval, but on different terms. If he could get the seller to reduce the price to $590,000, still make a 20 percent down payment, and use a 20-year fixed rate instead of a 15, I could issue an approval letter right there on the spot.

I supplied my client with his approval letter under the approval terms using the new information. My client made the new offer, this time with his approval letter in hand. The seller accepted. But it's possible that my client would have lost the deal without an approval letter issued with those specific terms.

If my client's ratios had originally been 70 but needed to be 40, I would not have tweaked him. There would have been no need to, as there would be no reason to even try to overcome such a disparity.

To clear the loan application for closing, all I had to do was read down the list of required items issued by the automated approval.

The AUS allows you to do some streamlining. The only things you need to put on your loan application are the things that are required to issue your approval.

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