Buying a Home: No Credit, No Problem

Many American's believe that in order to purchase a house, you must have good credit. This mindset is absolutely crazy! The people who profit off of other people using credit are the ones who push credit the most. *Banks... Cough* Banks want you to borrow money so that later you can have a higher credit score and borrow more money. Why? So that, later, you can borrow money, get a higher credit score and borrow more money. You see where I am going with this? This idea is absolutely stupid. I mean, after all, a credit score is an assessment of risk. But, what if there was a different way to assess to this risk? Let's keep going...

Most people have a home mortgage through a bank and, because the overwhelming majority of people, use this "traditional" method, it is the most publicized and socially-accepted. What if I told you that there is a better way for you to acquire the money you needed without going through a bank? Or, even better! What if I told you that there is a way that you can acquire a home without any credit at all! Well, there IS! It is a process known as

MANUAL UNDERWRITING.

Manual underwriting is exactly what it sounds like! There are two types of underwriting: automated and manual. Automated underwriting is done by a machine while manual underwriting is done by an actual person! with that being said, a manual underwriter will look at many different things in order to approve, suspend, or deny your loan request! Some of the things that will be taken into consideration are:

A reasonable down-payment

Proof of Payment history (bills, rent, etc.)

Income

Cash in reserve

*Each underwriter may take different things into consideration so always consult a professional!*

In fact, manual underwriting is a process that is picking up traction very quickly! According a study done by staff in the Office of Research of the Consumer Financial Protection Bureau (CFPB), a conclusion was drawn that 45 million people, 1 out of every 5 American's, are credit invisible! That's a great finding a step in the right direction. Credit invisible has nothing to do with hiding credit but, is the absence of a credit score altogether. With that being said, there has to be a process in place in order to ensure that the 20% of the US population have a roof over their head. So, let's take a look at what the manual underwriting process looks like.

There are 5 main steps to the underwriting process:

1. Getting pre-qualified

2. Submit necessary documents to underwriters.

3. Get an appraisal

4. Title matters (title search and ALWAYS GET TITLE INSURANCE)

5. Underwriter decision is made

As I discussed in bullet number 3, there are necessary documents that an underwriter may require for you and may depend on your individual loan type and/or situation. Some of the documentation that you may be asked to provide may include:

• House payment or rent

• One year record of deposits to checking or savings with increasing balance

• Utility payment records

• Proof of various insurance coverage

• Cell phone payments

• Payments to local stores

• Rental proof of goods

• Proof of student loan payments

• Proof of childcare payments

• Proof of medical bill payments

When in question about which documentation you should bring, always consult a professional who is experienced in the underwriting process.

A type when buying a home from Dave Ramsey, "No FHAs. No sub-primes. Nothing but your good ol’ 15-year conventional mortgage. Your monthly mortgage payments on a 15-year loan should be no more than 25% of your take-home pay."

For those who have no credit score (great job), there is hope for acquiring a home. The manual underwriting process can take anywhere from 3-6 months but, typically, a decision is made within a couple of weeks! This can be much quicker than a typical automated loan.

You may be asking, is a manual underwriting process really worth it? Of course. It is nice to have real human working with you and answering questions along the way. If you are a new home-buyer, the manual underwriting process is definitely the way to go!

For any further questions and concerns, please consult a manual underwriting professional in your area! They will better know your local market conditions. You can also send an email over to coincounselor@gmail.com and we will do our best to answer your questions and/or connect you to a local professional!