This Article Is About How Does Mortgage Process Work After Being Pre-Approved

Most folks consult with a loan officer when they are ready to purchase a home. It is unfortunate that many homebuyers, especially first-time home buyers go through stress and many have gotten last-minute mortgage loan denials even though they have prepared for months on how does mortgage process works. Many home buyers have read countless blogs, consulted with dozens of loan officers, read countless reviews and they still go through stress during the mortgage process. There is no reason why any borrower needs to stress during the mortgage process. How does mortgage process works after being pre-approved should be smooth?

Mortgage Process After The Pre-Approval Stage

Once pre-approved, there is no reason why home buyers not just close their home loans but close them on time:

• In this blog, we will discuss how does mortgage process work after being pre-approved
• The pre-approval stage of the mortgage process is the most important stage of the overall mortgage process
• Loan officers should not be issuing pre-approvals
• Loan officers can issue pre-qualifications
• All mortgage pre-approvals should be fully underwritten and issued by mortgage underwriters

Home Buyers should never enter into a real estate purchase contract without a pre-approval that has been fully underwritten and signed off by mortgage underwriters.

Was The Borrower Underwritten And Who Issued Pre-Approval?

Home Buyers believe in their pre-approval letters issued by their lenders. They believe with their pre-approval letter issued by their mortgage company that they can go and put in a real estate purchase offer. More importantly, buyers believe that the pre-approval they got issued is good as gold and once they submit their real estate purchase offer, they make plans to move. Buyers have garage sales and sell or donate old furniture and knick-knacks, clothes, and other belongings.

They register their children to their new schools and give notice of the exiting schools. They enroll their children in extra-curricular activities with the new home address. They give the post office to change their address effective a certain date. They tell their family, relatives, friends, and co-workers the great news of them purchasing a home and moving shortly. It’s not just buyers that prepare to move, it is also home sellers. Sellers are under the belief that the pre-approval presented to them is solid and purchase a home. Sellers prepare to move and pack up their belongings and schedule movers. Enroll their kids and whatever steps buyers took, sellers do the same. Then the whole world collapses on them when they find out that they got denied or no longer qualify with the lender that issued the pre-approval. What next?

How Solid Was The Pre-Approval?

What went wrong that buyers who were pre-approved gotten either a last-minute loan denial, were told they do not qualify, or are stressing during the mortgage process?

• How was the pre-approval issued?
• Was it the loan officer that issued it or a mortgage underwriter?

Was the file fully underwritten or was a pre-approval letter issued within an hour or two after the loan officer took the mortgage application?

Who Issues The Pre-Approval Letter

A pre-approval should always be fully underwritten and issued by a mortgage underwriter or a senior loan officer:

• A solid pre-approval takes anywhere between 3 to 7 days. Loan Officers should not issue pre-approvals
• Loan Officers should only issue pre-qualification letters
• A pre-approval should not be issued without the file being fully opened, processed, and underwritten
• Home Buyers should never rely on a pre-approval issued by a loan officer and ask for a loan commitment that is fully underwritten and signed off by an underwriter
• Home sellers should never accept a real estate purchase offer with a pre-approval letter that has not been issued by a mortgage underwriter and that has not been fully underwritten

This is the number one reason why loans do not close on time and there is stress for both home buyers and sellers during the mortgage process.

How Does Mortgage Process Work To Be Able To Close On Time

Home Buyers should never rush their loan officer for a quick pre-approval letter the same day. A solid pre-approval is the same as a loan commitment and should not be issued unless the file has been completely processed and underwritten. All pre-approvals should be signed by mortgage underwriters. A good solid pre-approval should take a week. Homebuyers can shop with a pre-qualification letter but never enter into a real estate purchase contract without a pre-approval letter that has been signed and dated by a mortgage underwriter.

Here Is How Does Mortgage Process Work

After the loan officer takes the mortgage application and runs credit, the pre-approval process can start. It starts by gathering all documents needs to process and underwrite the mortgage loan. It is highly recommended borrowers not transfer money around between bank accounts. This is due to the fact that mortgage underwriters need to see the paper trail for all large and irregular deposits.  There is no doubt that there is tons of paperwork in the mortgage process. Transferring money between financial institutions during the mortgage process will create added paperwork for both mortgage processors and borrowers alike. Plus endless letters of explanation with regards to the money transfers.

Provide Only One Bank Account If Possible

When loan officers request sixty-day bank statements, they mean a bank statement where they can document down payment and closing costs funds. Many borrowers may have multiple bank statements and lenders do not have to see all bank statements borrowers may have. If there is plenty of money in one particular bank statement, just provide that one bank statement. All costs involved with the purchase of the home and closing of the loan need to be verified and come from the borrower’s personal bank accounts. Do not use business bank statements if at all possible.

Multiple Bank Accounts

Cases, where there are fund transfers between a business bank account to a personal bank account here, is how it works:

• those funds are not verified qualified funds
• cannot be used since they came to personal account from business account

The Cooperation Of Borrowers Needed For Faster Pre-Approval

A pre-approval or loan commitment cannot be issued overnight by mortgage underwriters. A mortgage processor’s job is to make sure that all documents are in order and complete for the mortgage underwriter. A mortgage underwriter will never spend the time to try to connect the dots. If a file is incomplete or has missing pages, the underwriter will kick it back to the processor and the whole file is at the end of the food chain and needs to start all over. This is why it is important that borrowers fully cooperate with mortgage processors and be as thorough as possible when submitting paperwork. Do not rush. Take time and get it done right the first time around. The full cooperation of borrowers is required.

Teamwork During Mortgage Process

The mortgage process is a team effort that needs the cooperation of all parties to reach the finish line which is clear to close:

• Many borrowers do not know How Does Mortgage Process Work and often cannot understand why underwriters keep on asking for documentation during the mortgage process up to the date they close
• I often advise my borrowers to not try to make sense of the mortgage business but let’s just get the underwriter what they need so we get to the closing line
• People need to understand that mortgage underwriters have huge responsibilities

One mistake from them, the loan they underwrite cannot be sold on the secondary market and the company is stuck with a portfolio loan which means that the loan is not salable.

Things That Can Delay Mortgage Process

The mortgage process should not take longer than 30 calendar days from purchase contract to home closing. There are many things that can be avoided in mortgage closing delays. The most common delay that can be avoided is having accurate information, especially from an employer. A clear to close will not be issued if the employer does not cooperate when a call by the lender to HR is made to confirm the final verification of employment. Please cooperate and do whatever needs to be done when the time frame comes when the closing department needs to do the final verification of employment.

IRS Cooperation To Get Mortgage Documentations Confirmed

The Internal Revenue Service is one of the most powerful but, yet the slowest federal agencies in the U.S. Do not procrastinate with issues that need to be confirmed with the IRS. Tell the loan officer in advance if an extension was filed. IRS Tax Transcripts take time and need to be done earlier in the mortgage process. Any loan cannot be CTC without the IRS Transcripts being confirmed by the Internal Revenue Service.

If during the mortgage process there are any changes with regards to the real estate purchase transaction, let the loan officer/mortgage processor know as soon as possible.

Changes Of Circumstances

Changes to real estate purchase contracts are common.

Common changes that happen are the following:

• closing date
• purchase price
• sellers concessions

Documents To Always Have Handy And Not Packed

Remember that underwriters will continuously request information up to the day of the home closing.

Have the following documents always handy and do not pack them in boxes until the date of the home closing:

• Drivers license, passport, social security cards, insurance cards
• Bank statements, tax returns, W-2s, recent paycheck stubs

Any financial documents that relate to credit/income profile such as the following:

• mortgage statements
• property tax documents
• property insurance documents and insurance agents contact information
• HOA information and documents

Over 75% of Gustan Cho Associates Mortgage Group borrowers are folks who either gotten a last-minute loan denial or are stressing out during their mortgage process with their current lender. As mentioned in this blog, the number one reason for stress during the mortgage process is due to borrowers not being properly qualified by their loan officers. If you are stressing out during the mortgage process and need to take over your file, please contact us or text us for a faster response at 800-900-8569. Or email us at gcho@gustancho.com.  We are available 7 days a week, evenings, weekends, and holidays.