This Article Is About How The Mortgage Process Can Be Stressful If Borrowers Not Properly Qualified
The mortgage process does not have to be stressful. The number one reason why the mortgage process can be stressful is that the loan officer did not properly qualify borrowers. Another reason why the mortgage process can be stressful is that mortgage processors did not process the loan correctly prior to submitting it to the underwriting department. There are many considerations by homebuyers during the home buying and mortgage process.
Considerations Prior To Buying A Home
There are many things to consider when buying a home:
- Moving to a new neighborhood where do not know anyone can bring on a lot of stress
- So can getting to know the area and settling children to new schools
- However, the most stressful process in the home purchase process is the mortgage process
- Many folks are all upbeat when they first consult with their loan officer and get qualified
- By the time closing time rolls around, their loan officer is probably their least favorite person
In this article, we will discuss and cover how the mortgage process can be stressful if borrowers are not properly qualified.
Top Reasons Why Mortgage Process Can Be Stressful
Many tasks requested by loan officers might not make a lot of sense to home buyers. Borrowers provide 2 months bank statements. All of a sudden borrowers will be asked to go to the bank and get two months worth of printouts of bank statements. Not just getting 60 days of printouts but to get it signed by the teller and have the teller date it and stamp it. Why the task of supplying bank statements twice? In cases like these, loan officer probably may have noticed overdrafts on bank accounts. Even though borrowers provided two months bank statements, there is a line item on every bank statement where it shows YTD overdraft fees. To avoid more explanations on overdrafts in prior months, loan officer probably will advise borrowers to just get bank printouts. Might not make sense, but many things in the mortgage world do not make sense.
Avoiding Mortgage Process Can Be Stressful: Bank Overdrafts In The Past 12 Months
Mortgage underwriters will carefully scrutinize and analyze the borrower’s 60 days of bank statements.
Make sure the past sixty days of bank statements is clean, no overdrafts. Overdrafts are viewed by mortgage underwriters as being financially irresponsible. Some lenders do not accept bank overdrafts period. If you had bank overdrafts in the past 12 months, do not turn in your bank statements. Bank overdraft fees will show up on the most recent bank statements. This is because there will be a column about YTD OVERDRAFTS FEES. If there is a number on this column, the mortgage underwriter will know there were bank overdrafts in the past 12 months. If you had overdrafts in the past 12 months, go to the local branch of your bank and request 60 days of bank statement printouts. Have the teller sign, date, stamp, and sign the sixty days of bank statement printouts. Year-to-date overdrafts bank overdraft fees do not show up on the bank statement printout. A bank overdraft is not always a deal killer. If you cannot provide bank statement printouts and need to provide the actual bank statement, have your loan officer assist you with writing a letter of explanation (LOX) on the overdrafts. As mentioned earlier, some lenders are more strict with bank overdrafts than other lenders.
Irregular Deposits Over $200 On Bank statements
For borrowers with irregular deposits over $200 on your bank statements, the loan officer will probably ask to write a letter of explanation and source the deposits. For example, if there was a deposit on the bank account for $10,000, the loan officer will ask the source of deposit and documentation. If it was a gift from parents, the loan officer will ask for 30 days of bank statements from the parent’s account. This way it will provide paper trail funds leaving parents account and going into borrowers. Copy of deposit slip and updated bank statements after gift funds is required by both parties.
There may be a time where borrowers get conditional mortgage approval and submit all the required conditions but then the underwriter will come back with more conditions. This is when many get upset and start losing their patience. The loan officer might ask borrowers for updated paycheck stubs and updated bank statements. Borrowers submit updated paycheck stubs and bank statements and all of a sudden, the underwriter requests a letter of explanation why there was a $300 deposit and $1,000 withdrawal. They also want proof or canceled checks. The mortgage process requires a lot of patience. Instead of arguing or trying to make sense, the best advice is just needed to submit whatever the underwriter requests. The loan officer should explain the reasoning behind why so many requests are being made. Consumers must realize that the mortgage business is one of the most regulated industries in the country.
How To Avoid Avoiding Mortgage Process Can Be Stressful: Issuance Of Pre-Approval
All Mortgage Pre-Approvals should never be issued by loan officers unless the borrowers are properly qualified. Loan Officers should issue pre-approval letters if and only if the borrower has been properly qualified. With pre-qualification letters, homebuyers can shop for homes. Buyers should never enter into a real estate purchase contract with a pre-qualification letter. All pre-approvals issued at Gustan Cho Associates Mortgage Group are full loan commitments that have been fully vetted, a tri-merger credit report has been run, and the borrower got an approve/eligible per automated underwriting system. All pre-approvals should be underwritten and signed off by mortgage underwriters if the loan officer has any doubts about the borrower’s qualifications. This holds especially true on all manual underwriting files. Home Buyers should only enter into a real estate purchase contract with a solid pre-approval letter by the loan officer and/or a mortgage underwriter. The number one reason why the mortgage process is stressful is that home buyers enter into a real estate contract with a pre-approval letter being issued but not fully vetted and/or qualified. Manual underwriting files with late payments after bankruptcy and/or foreclosure should be underwritten and signed off by a mortgage underwriter. This is another main reason for the last-minute loan denial. Gustan Cho Associates closes 100% of all our pre-approval since they have all been vetted and qualified prior to the issuance.