Just as using a top-notch real estate agent enhances the quality of your home-buying experience, so does working with an astute mortgage broker or loan officer. The 80-20 principle applies to most businesses: 20 percent of the practitioners are excellent; 80 are not.
How do you find the best person to help you through the rigorous mortgage approval process that has become the norm in today’s housing industry? You need someone who knows how to work in the current environment. Getting a loan through the process to a successful closing requires grit and tenacity.
HOUSE HUNTING TIP: The best mortgage originators are good at anticipating what documentation the lender’s underwriter will require before your loan package is even submitted. When you make application for a mortgage, your loan person ought to be able to tell you what documentation will be required. Providing the documentation quickly is critical if you want to close on time.
Unlike several years ago, today’s mortgage lenders are fully qualifying buyers. This takes time. Factor this into your purchase offer. If you’re planning on using FHA financing, it will take at least 45 days to close, in most cases. Other mortgage programs may take 30 to 40 days, depending on the complexity of your financial situation. For instance, it’s easier for underwriters to verify income of a borrower who has one job and one W-2 than it is to verify income for someone who has multiple sources of income.
Ask your real estate agent and acquaintances who purchased or refinanced recently who they used for mortgage origination. Find out if they would use or recommend that person again. Understand that even the best loan people face frustration working with lenders in today’s environment.
For example, lenders change programs at the last minute. One buyer found out two weeks into the transaction that his lender was no longer offering no-point loans. This made a huge difference to the borrower who had only enough cash for a 10 percent down payment and closing costs. He asked the seller to credit him the amount he needed to cover the cost of one point (1 percent of the loan amount). The seller declined and the transaction was cancelled.
You will be working with your mortgage facilitator for at least 30 to 45 days, so make sure it’s someone you respect. Cooperation between the two of you is essential to make the process work.
Walk away from anyone who insists he can get you a good loan by falsifying your loan application or by finding a more qualified buyer to step in on your behalf and buy the property for you. Although lenders have cracked down on loan qualification, the Mortgage Asset Research Institute reported in March 2009 that mortgage fraud in the United States was at an all-time high, having increased 26 percent from 2007 to 2008.
You may not be able to use your favorite mortgage broker to get the loan you want. Loan officers work directly for lenders. Mortgage brokers don’t work for lenders, but submit a borrower’s loan package to a lender for approval. They are the middleman between you and the lender.
Last year, some large lenders such as Bank of America stopped accepting loan packages from mortgage brokers. You need to go directly to BofA to obtain one of their mortgages. Some buyers are establishing preferred banking relationships with lenders who they contemplate using for a purchase mortgage.
THE CLOSING: This could improve your mortgage approval process when you decide to buy.
Dian Hymer is a nationally syndicated real estate columnist and author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide," Chronicle Books.
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