Ep. 56: How To Handle Homebuyers Who Do Not Qualify For A Home Loan

Hello ladies and gentlemen My name is Robert Rico California Realty Training, hoping to bring some good information to you, if looking to get your feet off the ground in the real estate world

Hey, do yourself a favor, listen to some of these tips we give you, it might come in handy For example, today we're going to discuss how to handle a buyer who does not qualify for a home loan Now what do we do when one of our home buyers doesn't qualify for a home loan? First off, I wanna remind you remember 2007, 2008, 2009, in the real estate world What happened in those years? That's right, we had a huge recession in this country, a huge recession Home values were just decreasing like crazy and it was going on immediately, it wasn't a slow decrease, it was like almost overnight It was very, very substantial, and it was very, very quick That being said, a lot of people's credit score was effected for the years to come after that

So that being said we're here today 2017, you have a buyer who's excited and they wanna buy a home, it's their first home and it's an emotional time and they're gonna share this time with you They've picked you as their realtor It's nice, it's exciting, you're gonna be a big part of this deal So you take them to the lender, whether it's your preferred lender or their preferred lender You sit down they offer you a cup of coffee

Hey, Lender, How you doing? And the lender, of course does his financial analysis of these buyers, he checks their credit, checks their employment, checks if they have any money in the bank Two of the three is okay, one is not okay and the one that's not okay is the credit, they just assume So because their credit isn't the best, the lender says no can do

This isn't gonna happen They are not approved for a loan So you get upset as an agent, the buyers, of course are even more distraught over this They're like, Oh no, but we just found a house we really wanna buy So now we have a bit of a situation, here

So what do we do if the buyer doesn't qualify for a home loan? Well, there's a couple of things we do The ideal thing, of course would be if had a buyer who had all cash That happens rarely and it's far and few between So if you don't have a buyer cash, of course you're gonna need a home loan So now we got the home loan that gets denied, so what do we do? There's a couple of things we can do and there's a couple of reasons why home loans get denied

Number one reason why most home loans get denied is one of three things First one is the credit score The credit score isn't the best, but that can be fixed properly if we just stand back and just reason this thing out Think about it, the lender's gonna help you fix this The best thing to do is this

the only way to fix something is if you know what's wrong with it So what you do is this, you sit down with the lender and the lender gonna show you, they're gonna actually How To Handle Homebuyers Who Don't Qualify For A Home Loan Page 3 of 5 show you what your score is and how this score got to be I don't know 550

550's a pretty poor score and the lender's gonna show it to you, right there in back and white The reason you have a 550 is because this, this, this and this Well, now knowing this information as a home buyer, you can go back and fix these items Now, typically to fix this stuff might take months, could take years and you talk to your wife, your spouse, your husband well, now you say, Honey, I guess we're gonna have to go do this, and pay this off and do this, this, this and that can take months, years, but you're excited, you wanna get it done, now Well, sometimes that score, that FICO score is this close to getting a home loan It's this close, you're just shy of that pre-approval stage because your score is a smudge to small, too low So what do you do? That's why it's great to have a great lender in front of you

Great lender will tell you, well, listen, I just reviewed your credit report and if you go fix this, this and this what about this here, Mr Buyer, was this you back in 2014 and the buyer says, No, that's not my account and the lender says, well, we need to get this removed, if that's not you we have to dispute this and the good thing nowadays is that we have what's called a Rapid Rescore and a Rapid Rescore is exactly the way it sounds

They rescore your credit score rapidly Let me explain, you get a 550 FICO score and on your credit report there is an entry there that doesn't belong to you and that entry is affecting your credit score negatively, substantially It's really bringing it down It's something that happened back in 2014, now you wanna have that removed, because by having it removed, that will increase your FICO score enough, just enough to get that home loan So, typically, of course, the possible home buyer would go and contact the three credit bureaus, ready? TransUnion, Equifax and Experian and they will inform these three credit bureaus, Hey, please remove this item

Here's the proof that it's not my item or here is the proof that it was paid back in 2014 Please remove this from my credit report, cause I'm looking to buy a house Now you try telling a home buyer, Hey, well you're gonna have to wait 30 to 60 days, maybe longer for us to remove this Uh-uh, a home buyer wants it done quickly, cause they wanna get into the house So the buyer asks if the lender

can you please have my credit rapid rescored and the lender will say, well sure Now with the rapid rescore, what happens is the lender submits the evidence that the debt was paid or it was disputable The disputable debt should be taken off with the three credit bureaus and the lender can have that removed within the 3 to 7 days, sometimes

It happens quickly Which is great because now the buyer can get back in the real estate game, then go out a purchase their home knowing that their score has increased all because of the rapid rescore The rapid rescore did great for them, which is fantastic, everybody's happy, you now have a client who's ready to rock and roll The lender's ready to loan the money out to the buyers, the buyers are ready to go out and purchase their How To Handle Homebuyers Who Don't Qualify For A Home Loan Page 4 of 5 property and everybody's honky-dorky It's a beautiful world all over again

So there's options out there Another reason why some buyer's don't get their loans approved right away is because, of course they haven't been at their jobs long enough Some buyer's don't get their loans approved because their debt to income ratio is much too high Sure they make a lot of money, but they have a lot of debt which is a [Spanish 00:05:41] Ready, there's a couple of things I also want you to know, another couple of options when it comes to buyers who are not getting approved immediately

They can also go to a mortgage broker Mortgage brokers don't have any money to lend, that's why they call the brokers, cause they're broke What they do is they originate They originate loans, which means they just begin the loans, right? But the cool thing about mortgage brokers is they know tons of people in the lending industry, which means they know tons of lenders who are willing to loan, with different criteria Sure Bank of America, or Wells Fargo, or Chase all these big huge banks may have the criteria that of you wanna borrow from them you gotta meet these criteria but there might be other lender's out there who are much smaller, who have criteria that's down here and you may qualify with a slightly, not so strong FICO score

You may qualify for their loan with not so much income, you may qualify for their loan without being at your job for two years These mortgage brokers have the ability to contact tons of lenders and they may find one They may find one that will accept your buyer's financial situation Last but not least we have what we'll call hard money lenders They can provide a loan to the buyer, sure, a short term loan for high interest rate and the buyer then has the ability to go buy his house, but he's gotta return that payment pretty darn soon and if not, that interest rate is extremely high

Got it? So there's a few options So if your buyer right away doesn't get qualified for a loan, do me a favor don't hesitate and don't let them walk away Do yourself a favor, do them a favor help them get a loan How? By showing them the avenues of getting there How? Showing them a lender who can help, maybe a mortgage broker, maybe a hard money lender but ready, wait for this most of the time a great lender will sit down with them patiently and explain to them, listen, if you do this, this and this your FICO score will increase tremendously and it will help you the buyer, get that home loan you've always wanted Hope this helps you out, don't let any buyers get away The lender will decided if they're worth keeping or not Help them, help them, help them! This is the business of not making commission, but this is also the business of people, which means you gotta help, help, help, for their benefit, not just yours

Hope this helped you out Have a great afternoon, if you have any questions or concerns do yourself a favor and us a favor and leave it down below in the comment section If you have any questions, let us know and don't forget to subscribe to our channel Have a great day, see you next week