In part one of this two-part blog series, we went over some basics on behaviors or application errors that might lead to a higher chance of denial for a VA loan. Backed by the Department of Veteran’s Affairs, VA loans offer no down payment and several other benefits, but do require meeting some basic thresholds and avoiding various issues to qualify.
At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to offer a wide range of loans to first-time homebuyers and many others, including VA loans to qualified service members, veterans and spouses. In today’s part two of our series, we’ll go over a specific set of circumstances to be aware of here: The possibility for a denial based on automated underwriting, plus what you can to do get around this issue if it shows up for your application.
In today’s modern age, there are many mortgage lenders who utilize automated underwriting as part of their loan application and approval processes. Automated underwriting refers to an online portal lenders use to upload loan applications and all their relevant information, with algorithms meant to evaluate the application data and come up with an approval or denial based on it.
Manual underwriting, on the other hand, is the traditional method of underwriting. An actual underwriter reviews the documents and application, then determine eligibility. For many VA loans, FHA loans and other programs, the preference among many lenders is automated underwriting, with manual underwriting serving as a secondary method.
Automated Underwriting Denials
In some cases, however, the automated underwriting system may deny a VA loan application for reasons that aren’t fully correct. Maybe there was an incorrect input from the lender into the portal, for instance, or perhaps there’s an error on your credit report that the automated system is viewing as correct.
If you are denied by an automated underwriting system for a VA loan and you believe one of these issues was at hand, do not give up.
Request Manual Underwriting
Rather, request manual underwriting done by an actual home loan underwriter. There are many cases where such an individual will approve a given application once they’ve been informed of an issue like an input error or a credit report inaccuracy – but automated underwriters are incapable of this due to their computerized nature. There are ways you can supply additional documentation that allows the underwriter to grasp a larger picture of your finances, understanding why an issue that appeared like a blocker to approval initially might not actually be as large a concern.
For more on underwriting formats and VA loan approval, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.