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!

13 views

(940) 393-1472

©2020 by Coin Counselor