This guide covers changing lenders during underwriting process before closing. The mortgage approval process does not have to be stressful if the borrower is properly qualified and the loan officer has set proper expectations for the mortgage process. Alex Carlucci, a senior loan officer at Gustan Cho Associates, explains the number one reason for a last-minute mortgage loan denial:

Suppose the borrower has been issued a pre-approval letter without being properly qualified. In that case, the mortgage process can be one of the most stressful processes a home buyer or homeowner can go through. This is especially true if the loan officer and support team are disorganized.

Over 80% of our borrowers at Gustan Cho Associates could not qualify at other lenders due to their lender overlays. Many of our borrowers are transferring their home mortgage from a different lender to us. Changing lenders during underwriting process is becoming more and more common. In the following paragraphs, we will cover changing lenders during underwriting process.

Reasons For Changing Lenders During Underwriting Process

Many of our borrowers at Gustan Cho Associates are changing lenders during underwriting process to us. There is no reason borrowers should get a last-minute mortgage loan denial or stress during the mortgage process. The first reason for last-minute mortgage loan denial or stress during the mortgage process is that the loan officer did not properly qualify borrowers. Loan officers should not issue pre-approvals without properly qualifying borrowers.

Importance Of a Solid Pre-Approval Letter

All of our pre-approvals at Gustan Cho Associates are fully qualified. If a loan officer is unsure about a particular agency’s mortgage guidelines, the loan officer will get a second opinion from a supervisor or a mortgage underwriter.  John Strange explains how the team at Gustan Cho Associates issues pre-approvals to borrowers:

No loan officers are authorized to issue and sign off on borrowers’ pre-approvals without getting an approve/eligible per the automated underwriting system (AUS). Loan officers can issue pre-approval letters after fully qualifying borrowers, reviewing the necessary docs, and getting approved/eligible per AUS.

Homebuyers and their families depend on our pre-approvals. So if a loan officer issues a pre-approval within an hour, borrowers need to think twice about whether or not the loan officer properly qualified the borrower. Gustan Cho Associates close 100% of all of our pre-approved borrowers. We do not close on all of our pre-approved borrowers, but we close them on time. Click here to get pre-approval for your mortgage

Stress During the Mortgage Process Can Be Avoided

As mentioned earlier, there is no reason why borrowers should stress during the mortgage process or get a mortgage loan denial. Many borrowers feel many things asked by their lender are extremely petty. Borrowers need to understand that mortgage underwriters have a lot of weight on their shoulders. Underwriters can get fired for approving and issuing a clear to close on a mortgage where the borrower does not meet agency guidelines.

Issue With Underwriters Not Clearing Conditions and Issuing New Conditions

Mortgage underwriters should not be asking for the same conditions repeatedly. After providing conditions on a conditional loan approval, mortgage underwriters come back with more conditions. There may be instances where an underwriter may not have listed a condition on a prior updated conditional loan approval and issued a new condition on a new updated conditional loan approval. Dale Elenteny explains how changing lenders during underwriting process works:

Whatever the underwriter requests is easier to provide than try to make sense of it. Many times, borrowers get so stressed by mortgage underwriters repeatedly asking for the same conditions. This should not happen.

The underwriter should not keep on issuing new conditions after new conditions over and over again. The loan officer needs to get involved with the underwriter or underwriting manager when the underwriter issues new conditions after conditions. Borrowers eventually give up or fire their current lender and look for a different lender.  Common borrower complaints are loan officers not answering phone calls or returning emails timely. Borrowers frantically search for other lenders thinking that someone else will make things easier.

Reasons Why Borrowers Change Lenders During Underwriting Process

One of the reasons why borrowers think about changing lenders during underwriting process is due to personality differences. Studies prove that one of the biggest complaints against loan officers is that they do not return phone calls promptly. One of the many complaints I get from borrowers who have dealt with borrowers transferring from other lenders is that they were promised the world, and loan officers/support staff were next to impossible to get a hold of.

The biggest reason borrowers change lenders is because they have gotten their home mortgage denied by the underwriter. Changing lenders during underwriting process does happen for various reasons.

Borrowers were constantly cold-called; once they completed their mortgage application and signed the intent to proceed, they were treated like second-hand citizens. Every time borrowers called their loan officers, it went straight to voice mail, and they had no calls back. They needed to call them until they picked up their phone constantly. Mortgage professionals should always return their borrower’s phone calls or emails promptly. Loan Officers should be available seven days weekly, including late evenings, weekends, and holidays. Talk to us about your mortgage, click here and fill up form with your initial requirements

Will Changing Lenders During Underwriting Process Cause Delays?

Why do borrowers think about changing lenders during underwriting process? Is it due to personality differences? Is it because the loan officer does not return phone calls? Is it because the loan processor keeps on asking for the same thing over and over again and misplaces the information? Ronda Butts, a dually licensed realtor and loan officer at Gustan Cho Associates explains why so many borrowers coming to us are changing lenders during underwriting process:

Over 80% of our borrowers are changing lenders during underwriting process or could not qualify at other lenders due to their lender overlays. Gustan Cho Associates has zero lender overlays on government and conventional loans.

Is it because the loan officer keeps changing the loan terms and conditions during the mortgage process? Is it because the loan officer has total disregard for the loan commitment date and closing date, and you need to request a closing extension over and over again without a loan approval? Is it because the mortgage underwriter keeps on asking for more conditions after conditions after submitting all of the conditions from the initial conditional mortgage loan approval? Whatever the reason, changing lenders during underwriting process will delay mortgage loan closing no matter how much more competent the new mortgage lender is.

Going About Changing Lenders During Underwriting Process

Borrowers who already decided on changing lenders during underwriting process will be changing lenders need to start the process all over. Need to complete a brand new mortgage loan application, 1003, and the new mortgage lender needs to run a new credit. Need to provide all mortgage loan documents such as the following:

• Two years W-2s
• recent paycheck stubs
• 60 days bank statements
• other documents borrowers submitted to the first lender

If the first lender has ordered an FHA appraisal, the appraisal can be re-used. FHA Home Appraisal transfers when the new lender requests an FHA Case Number transfer. Borrowers who had a conventional appraisal done, the chances are that a new conventional appraisal need to be ordered. Plan on having the mortgage loan close 30 days from the day submitting all of the mortgage documents, signed mortgage disclosures, and signed mortgage application. It is strongly recommended borrowers stay with the original mortgage lender and close on the home loan instead of having emotions upset them unless they have to transfer or get a loan denial.

Changing Lenders During Underwriting Process To a Lender With No Overlays

Gustan Cho Associates is a national mortgage company licensed in multiple states with no lender overlays on government and conventional loans. We go off the automated findings of the automated underwriting system. Gustan Cho Associates has a national reputation for being a one-stop lending shop.

The team at Gustan Cho Associates offers government and conventional loan programs and a wide variety of non-QM mortgages for borrowers who cannot qualify for government and conventional loans.

Some of our most popular alternative financing home mortgage programs are mortgage one day out of foreclosure and bankruptcy, 12-month bank statement mortgage program, non-QM Jumbo mortgages with credit scores down to 500 FIC0, mortgages with late payments in the past 12 months, and dozens of other non-QM loan programs.  Borrowers who get a last mortgage loan denial or are stressing during their mortgage process and are thinking of changing lenders, please get in touch with us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays. Click here and fill up form and we will call or email you

This guide on changing lenders during underwriting process was updated on March 1st, 2024.

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