Keep in mind, that any one of these red flags doesn’t necessarily mean the buyer cannot be approved for a loan. But each red flag will make things more complex and challenging, and multiple red flags could make things impossible. If you encounter a red flag, you must find a way to resolve the issue, so the buyer gets approved for the loan.
Bad Credit
When someone has a poor credit score, it is going to be hard to get the loan to go through. There are loan programs available that can help someone with shaky credit, but it adds an extra level of work as compared to someone with a credit score of 720 or better. A good lender will know how to lead your client to the right program. An expert in loan program requirements can get someone approved for a loan, even if they have terrible credit.
Tax Liens
A tax lien is when the government places a claim on a person’s property when said person fails to pay their taxes. It doesn’t mean the property was seized, but it means that the government will take that person’s property if seizure becomes a reality. Federal tax liens are a huge issue. Your client must resolve them before closing on the sale. If the lien is ignored and the information pops up at the closing, the transaction is going to die at the closing table with everybody unhappy. State tax liens are similar with the same consequences and must be resolved. However, a state tax lien is less severe than a federal lien, and thus a little easier to resolve. But liens must be resolved, or the deal will fail!
Recent Bankruptcies
Like tax liens, recent bankruptcies can be an issue that your loan officer must know how to resolve. However, unlike tax liens, someone who has gone through bankruptcy is not automatically
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