Home Buy's Credit Approval Makes It Difficult To Sell A Home Today

Anyone who has ever been turned down for a mortgage loan knows it can be an unpleasant experience

, and it's one that many people experiece in this difficult mortgage market. So, some homeowners trying to sell a house are giving consideration to selling a house for cash instead so that they won't have to wait for traditional buyers to obtain financing. Waiting for a buyer to get loan approval and then discovering that buyer has been being turned down is too common and too frustrating.

Everybody knows that the mortgage crisis has created a bad situation for sellers. But most people don't know the reasons so many borrowers with good credit scores are being denied, unless they have experienced it themselves of course. One common reason occurs when a borrower's credit history has changed in the past year or so. Lenders look for consistency and put more weight on that factor, even more so than an increase in salary at a new or existing job. It doesn't make sense, but lenders now often choose to overlook a recent salary increase and take an average of a borrower's historical earnings instead when they try to sell a home. And it doesn't seem fair either, but private lenders making subjective determinations are not required to be fair, only to stick to federal and state lending guidelines.

Also closely scrutinized is a borrower's pattern of saving money in the past, which carries more weight than the amount of their current savings. Of course any lender needs to see enough cash in savings to cover the down payment as well as a healthy remaining balance after closing. Basically, a lender needs to see a substantial cushion in the accounts in order to calculate that house mortgage payments will be made in a timely manner no matter what happens to the borrower's monthly income. What seems like drastic measures that are being taken now, compared to looser standards in the past, can drastically impact how much money a buyer is qualified to borrow to buy a house at all, especially because the national tend reveals that most people have less money in savings now than they may have had in the past.

Some homeowners are discovering that selling a house for cash is a quick, easy alternative to the typical long wait for a buyer to get loan approval, or very possibly loan denial. Because the federal government has new standards that lenders must all meet, each lender has the right to put an "overlay" of additional requirements on top those specified by the government, and the whole complex set of rules is what makes or breaks the applicant's chances with each particular mortgage lender. So, regardless of whether your buyers are pre-qualified or not, their situation is likely to change as the mortgage application process progresses, which means things can change greatly for you, too. That's why some sellers decide to call a real estate investor about selling a house for cash.

by: Leo Kingston

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