Why does it seem so hard to get a mortgage?Verify my mortgage eligibility (Oct 17th, 2021)
As a mortgage advisor, I have heard this question asked for the past 20 years and I often ask myself the same question. We all want the loan process to be as easy as possible, supply the least amount of documentation and close as fast as possible. In the end, we all say to ourselves, "how can this possibly take 30+ days to accomplish?"
Here are a few tips that agents and consumers can review that will help expedite the mortgage process:
1. Documentation - The number one thing you can do to expedite the process, is to get clear copies of all of the documentation that your mortgage advisor asks for. You will be wondering, why do I need to give him/her that - or - why do they need the last page of my bank statements when there is nothing on it but a page number? Seasoned mortgage advisors will always take the approach of less is better, they won't be asking you for anything that they don't need to gain approval. As an alternative, if you are working with an advisor that has limited experience, be prepared to send excess documentation. They may not have the experience to know what is and what is not required for an expedited approval. Most of you will be applying for conforming loans. The key word here is "conforming." The lender's underwriting requirements "conform" to Fannie Mae and Freddie Mac's guidelines. This equates to box checking. Think about how many people are applying for mortgages right now. If this wasn't a box checking exercise, the lenders' underwriters would never be able to handle the volume. When the advisor asks for a document, it is needed to check the box on the lender's side. Seasoned advisors know when to push back on inexperienced underwriters asking for documents that are unnecessary, but assume that if we ask for it, we need it. When you send something to your advisor, make the effort to scan the documents as clearly as possible. Lay the document flat, make sure that all corners of the document are in the frame and review the document before you fire it off in an email. Say to yourself, "if I was on the receiving end of this document, would I be satisfied with the content and clarity?" With everyone having a smartphone these days, there really is no excuse that you cannot scan something clearly. Try using an app called Turbo Scan that you can find on the iOS and Android app stores. Keep in mind that there will always be a request for additional documentation after the underwriter reviews the file, so don't get discouraged when your advisor asks for more documents. A good advisor will ask for a lot up front and leave little to be needed later, but underwriters love to throw curveballs and ask for things that we may have not thought we needed.Verify my mortgage eligibility (Oct 17th, 2021)
2. Appraisal - First thing to remember, is that on a refinance, the borrower (homeowner) will be contacted directly by the appraiser and on a purchase loan, the listing agent is contacted. With that being said, provide the mortgage advisor with a couple contact numbers that will be answered on the first or second ring. If you are one of those people that doesn't pick up the phone when you see a number you don't know, you need to change for the next 15 days after going into application and make sure you listen to your voicemail. You need to understand the basic rule of processing loans, if someone calls you and you don't answer, you go to the bottom of the pile. IMPORTANT: the mortgage advisor cannot have any contact with the appraiser in an effort to ensure that the appraiser's opinion of value was not influenced in any way. The advisor only gets notification once the appraiser has successfully scheduled the appointment with the homeowner / agent. It is your responsibility and/or your real estate agent's to ensure that the appraisal has been scheduled.
3. Title - Occasionally, there are things on title that have to be dealt with. When something comes up on title such as old open liens or judgments, keep in mind that the mortgage advisor has little to no control over this. Borrowers love saying, "I refinanced that lien years ago, tell your title company they are wrong!" What the borrower must remember is, title companies hire abstractors to go search county records to surface all applicable recorded liens and satisfactions. If there was never a satisfaction of lien filed by your previous lender, then the abstractor will not find it in their search. What this means to you is, YOU need to call your previous lender and get them to execute a satisfaction of lien that should have been done correctly the last time. This is something that you as the homeowner will need to do and not the title company or the mortgage advisor, as the previous lien holders typically will not talk to anyone but the homeowner. We can certainly facilitate, but ultimately this falls on your shoulders. Some states require a bankruptcy and judgment check to be performed. Many times I have seen results come back that indicate that there has been a bankruptcy or judgment filed under the borrower's name. Don't get crazy if it is not yours! There are other people with the same name as you. The title company can have you sign a affidavit that states that these findings are not yours, but rather someone's with a similar name.
4. The Sales Contract - I cannot tell you how many times I have had problems with the sales contract. Number one problem is that the contract has been faxed 3-5 times and is now illegible. AGENTS! if you are still faxing contracts, it might be time to invest in a PDF program and DocuSign! Please do not fill it in with your chicken scratch! Before you commit to any potentially unrealistic mortgage contingency, e.g. 10 days, consult your mortgage advisor to determine if that timeline is feasible. If you just sign a contract and later say to me, "hey Ryan, the mortgage contingency is 10 days, can you get it done? I will tell you no, even if I think it is possible. I will not take on the risk of the homebuyer forfeiting their earnest money, because of an unrealistic time constraint. It is best to get the agent, homebuyer and mortgage advisor all on a call to hammer the contract out correctly. It is a great way to bring all of the parties together to not only introduce, but to allow for an open forum for questions. If everyone is on the same page and the expectations have been set right, then there will be less chance for surprises down the line.Verify my mortgage eligibility (Oct 17th, 2021)
5. DO NOT DO ANY OF THESE during the homebuying or refinancing process!!!:
a. do not switch jobs
b. do not quit your job
c. do not buy a new car until you have closed
d. do not go and run up a credit card ordering furniture for your new home
e. do not run up any other debts including, but certainly not limited to, student loans
f. do not call any collection companies that you see on your credit report (you can actually hurt your credit by doing this)
g. do not make any large deposits or withdrawals into/from your bank account
h. do not co-sign on anything during the loan process
i. do not file your tax returns during the process, unless you check with me first
j. do not change your hours at your job if you are an hourly employee, i.e. work less hours
k. do not think that once we pull your credit, we will not see you having your credit pulled for that new car or credit card account. Lenders will run an undisclosed debt soft credit pull, which will not affect your score, but will let them check to see if you applied for any new debt before you close that could affect the underwriting approval. I cannot tell you how many times people killed their home purchase because they had to get that new car or credit card right before closing!
If you are an agent, please pass on these five things to your homebuyers to ensure the process goes as smoothly as possible.
If you are a homebuyer or a current homeowner, please also pay close attention to these things. I can assure you that your mortgage experience will be far less stressful if you listen to me on this.
This post originally appeared in Mortgage Acuity's Morning Mortgage Minute blog series. If you liked this information, check out other posts by this author and his business partner here.Show me today's rates (Oct 17th, 2021)