A jumbo lender will scrutinize every credit report they look at very closely. They look for much more than payment history and what the payments are.
Here is a list of ten items that a jumbo lender will pay attention to and why they think it is important:
- Late payments - a borrower's willingness to re-pay is of great concern. A credit history with several late payments, especially recently, suggests to the lender that the borrower may not be a good candidate for a loan.
- Number of active trade lines - borrower's with a lack of recent credit use presents a lender with not enough evidence to conclude that the borrower is a competent user of credit.
- Disputes - a history of disputes with creditors suggest to a lender that a potential borrower may not have the willingness to repay their debts.
- Address variances - Addresses reported in the last twenty four months that are not on the application must be explained. Property occupancy is extremely important to lenders. Borrowers who have multiple addresses reported on their credit report suggest that they may not be living where they claim to be on the application.
- Name variances - Name variances need to be explained in order to establish the identity of the borrower. The concern here is that the borrower is the actual applicant.
- Public records - Collection accounts, judgments, etc. suggest there may not be a willingness to repay debts.
- Duplicate accounts - a jumbo lender will want to eliminate a duplicate account in order to help an applicant qualify! It's not all negative!
- Inquiries - Inquiries by other creditors within the past 90 to 180 days (length of time depends on the lender) need to be explained. The concern here is that the applicant has acquired more debt. More debt will increase the applicant's debt-to-income ratio. An increased debt-to-income ratio may make the loan unapprovable. Be aware - lenders can be alerted to a credit inquiry after the initial credit report has been pulled, so don't try to game the system!
- Installment loans - How many payments are left on the installment loan? If there are 10 payments or less, than the lender may not count the monthly payment in the debt-to-income ratio!
- Social Security number variances - borrower identification is blurred by the reporting of more than one Social Security number. Proof of the correct number is usually required, such as a copy of the Social Security card.
There may be other items a jumbo lender will look for, but these are some of the items I have experienced having to document.
Do you know any others?
Phil Caulfield NMLS #386911 APMC #1850 has been helping people obtain mortgages since 1985. The views, articles, postings, and information listed at this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation."