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It is hard enough for some of us to have a good DTI. Overlays seem ridiculous in many cases. What is your take on this potential problem for buyers? We are looking at the USDA Direct Loan program. And would like to find a lender that won't jeopardize our journey all because of overlays. How would going through a Credit Union compare to finding a lender that advertises "No Overlays"? Give me your insight.
It is hard enough for some of us to have a good DTI. Overlays seem ridiculous in many cases. What is your take on this potential problem for buyers? We are looking at the USDA Direct Loan program. And would like to find a lender that won't jeopardize our journey all because of overlays. How would going through a Credit Union compare to finding a lender that advertises "No Overlays"? Give me your insight.
I never heard of overlays .
You can get a loan with a bank that does USDA loans, or do USDA direct loan.
Direct USDA Loan: USDA funds the borrowers of these loans directly. In other words, your lender becomes USDA instead of a bank.
USDA is for low income. In some areas, the limit falls below $17,000 a year income.
It is hard enough for some of us to have a good DTI. Overlays seem ridiculous in many cases. What is your take on this potential problem for buyers? We are looking at the USDA Direct Loan program. And would like to find a lender that won't jeopardize our journey all because of overlays. How would going through a Credit Union compare to finding a lender that advertises "No Overlays"? Give me your insight.
Jeopardize your journey?
You either meet the lender's requirements or you don't.
The way to have a good DTI is don't live on borrowed money. Stop using credit cards every time you want something. Wait until you save up the cash to buy it. Meantime, pay down those credit card balances.
Generally, overlays are the additional requirements a lender has that may be above and beyond what the insuring agency requires. This helps minimize their risk. You will be hard pressed to find a lender who truly has no overlays. It's just that some are more obvious than others.
One lender may allow you to meet the minimum USDA guidelines while requiring you to have 2 months payments in reserves after closing. Obvious. Another lender may not require the reserves, but they charge you 1/8% higher interest rate. Not obvious.
Will lenders discuss their overlays before an application is submitted?
Guidelines always come into play when discussing the specifics of loan programs and how they match up with a borrower's specific situation. So as we discuss loan types, I know my program guidelines.
*That's not to say that there haven't been a thousand cases of a Loan Officer not knowing their own overlays, and finding out well into the process.
Overlays usually aren't published or talked about, they're more like dirty little secrets. LO's will deny their existence. however, an experienced broker that does volume will usually know where to deliver your loan to avoid a specific overlay. even if they make less.
I know which of my guidelines are investor overlays and which competitors don't have those same overlays. Nothing frustrates me more than when my company wont close a loan, it gets moved to a competitor, and they close it. Especially if it's FHA and gets insured.
Usually comes down to risk. Try saying something like "I spoke to xyz, he/she said their uw checked with their investors and this isn't an issue with them. can you see if you can make an exception?"
Depending on the issue, sometimes there's wiggle room....
Last edited by anicon; 01-12-2019 at 08:29 AM..
Reason: typo
Will lenders discuss their overlays before an application is submitted?
If you're a consumer, as a general topic of discussion, I would seriously doubt it. Unless there is a specific issue and the loan officer knows they wont be able to write the business.
However, a good wholesale account executive will tell their broker/lender partners about overlays if asked.
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