Stress During Mortgage Process
How To Avoid Stress During Mortgage Process
If you are a home buyer and you have credit scores of 850 FICO, have a six figure paying salary job that you had for more than ten years, have a solid 20% down payment for your home purchase, have plenty of reserves, never been late with any payments in your life, and have an executed real estate purchase contract and are going through the mortgage process, chances are that you will not stress during mortgage process. However, is the not always the case scenario. Most mortgage loan borrowers who come to me for help have either been told they do not qualify for a mortgage loan due to the mortgage lender overlays with the bank or mortgage company they went to or got a last minute mortgage denial due to the mortgage loan officer not qualifying them properly initially. Many mortgage loan borrowers who come to me have gone to multiple mortgage lenders and were told they do not qualify and have gone through stress in the mortgage application process already .
Not everybody has had perfect credit all their life. Many people got hurt from the Great Recession And Real Estate Meltdown of 2008 . Millions of hard working Americans lost their jobs, lost their businesses, filed bankruptcy, had foreclosures, and a large percentage of Americans lost all of their life savings. Many who retired were forced out of retirement and seek other jobs. Millions of homeowners and property owners who owned investment properties who has substantial equity in their properties lost it all, literally overnight. Many Americans who had professional careers make over six figures a year found themselves unemployed and not marketable in the job market so they had to settle for jobs at a fraction of the income they were once making. The Great Recession of 2008 wiped out whole industries and the mortgage industry went through a total overhaul where all mortgage loan originators and mortgage companies had to go through rigorous testing and licensing requirements, wiping out half of all mortgage loan originators. The sub-prime market and the companies and workers who were in the sub-prime mortgage lending market totally got wiped out and workers had to seek careers in other fields. Bankruptcies and Foreclosures hit historical highs. The Great Recession of 2008 was the longest lasting recession in U.S. History and some experts swear that it was more of a Depression than a Recession. Many now have recovered from the Great Recession of 2008 and are ready to start their lives over again and want a second chance of home ownership. Many home buyers stress over their past bad history and worry about being able to get a mortgage. Many home buyers who want to get pre-approved get different answers by different lenders on why they do not qualify for a home loan. After multiple mortgage denials, the find me and I tell all of my mortgage loan borrowers the straight scoop, not what they want to hear but the facts: As long as you have documented income, you can have low credit scores and prior bad credit, but it is not if you will qualify for a mortgage but when you will qualify for a home loan. I get everyone who come to me a loan approval. Those who have very low credit scores or had recent late payments, I will work with them to get their credit scores up and re-established and will get them approved. We work as partners during the qualifying, processing, underwriting, and closing process.
They then contact me, either through a real estate agent referring them, family member or friend referring them to me, or after researching on the internet and finding me online. These folks are already stressed out when they call me and after I tell them that I can do their mortgage loan and get them approved and closed, they are in disbelief and stress during mortgage process until they close on their home loan and get their keys. They then break down in happy tears. I have so much respect for mortgage loan borrowers who do not take no for an answer and keep on trying until they find a mortgage lender who can help them until the dream of home ownership becomes a reality. I know too well the stress during mortgage process and on this article, I will advise on ways of avoiding stress during mortgage process so it will make the mortgage application and mortgage approval process much easier to mortgage loan borrowers.
Understand Mortgage Process Is Way To Avoid Stress During Mortgage Process
One way I try to help my borrowers avoid stress during mortgage process is by explaining the mortgage application and mortgage approval process when they first call me and we have our first phone interview. I explain to the mortgage loan borrower that the pre-approval stage is the most important part of the mortgage application and approval process. Most last minute mortgage denials is due to the mortgage loan officer issuing a sloppy quick pre-approval letter where the loan officer does not review the two years tax returns and look at unreimbursed expenses and qualify the income properly and does not thoroughly review the borrower’s credit report and look for public records and other important items on the credit report. For example, a typical loan officer will take the mortgage loan application and pull the credit on the borrower. The loan officer will just take the borrower’s word on how much income they make and takes the borrower’s word on the overtime income they make. The mortgage loan originator then pulls the credit on the borrower and sees that the borrower meets the minimum credit score requirement. The loan officer then issues a pre-approval letter without thoroughly reviewing the income and the credit report of the borrower. The pre-approved borrower then goes out shopping for a home with the pre-approval letter and enters into a real estate purchase contract. The loan officer then requests a list of documents he or she needs to collect for the mortgage loan processor . The mortgage loan processor then collects the documents such as the two years tax returns, two years W-2s, most recent 30 days paycheck stubs, 60 days bank statements and then uploads the whole mortgage loan application and submits it to the opening department of the mortgage company. Once the opening department registers the mortgage loan applications, then the mortgage loan disclosures and application gets emailed out to the mortgage loan borrower for them to acknowledge it and sign and return. Once the mortgage lender receives the signed disclosures back the mortgage file is ready to be submitted to underwriting and the file waits until a mortgage loan underwriter gets assigned to it. Here is what can happen because the mortgage loan originator did not qualify the mortgage loan borrower correctly and was not diligent enough prior to issuing the pre-approval letter:
- The mortgage loan borrower can have the debt to income ratios exceeded the maximum allowed because the loan officer did not take into account the unreimbursed expenses, did not count the 5% of the outstanding collection account balance to count it towards the calculations of the borrower debt to income ratios, did not count child support and/or alimony payments, did not realize that the borrower had not been in a part time job for two years so the part time income cannot be counted, did not realize that the borrower did not get bonus and/or overtime income for two continuous years so the part time and/or overtime income cannot be counted, had declining part time and/or overtime income so the mortgage loan underwriter will not count part time and/or overtime income.
- Credit Report: A mortgage loan application can go into suspense if the mortgage loan underwriter notices credit disputes on the borrowers credit report. Credit disputes during mortgage process will halt the mortgage process. The mortgage loan borrower needs to retract the credit disputes before the mortgage loan application process can proceed. However, once a credit dispute is retracted, then the chances are that the borrowers credit scores will drop. Mortgage loan borrowers who barely meet the minimum credit score requirements for home loan may not qualify if the credit scores drop below the minimum credit score requirement after retracting the credit disputes. This task should have been done prior to the loan officer issuing a pre-approval letter.
- Public Records: Mortgage loan originators need to check the recorded date of foreclosure and deed in lieu of foreclosure prior to issuing a pre-approval letter. There are many times where the reported date on the credit report on a foreclosure or deed in lieu of foreclosure is not correct. There are mandatory waiting periods after a foreclosure and/or deed in lieu of foreclosure but it is not the date when the homeowner turned in their keys to the bank and it is not the date it was reported on the credit bureaus; the waiting period start date is the date of the sheriff’s sale and/or the date the deed was transferred out of the homeowners name into the name of the mortgage lender. This is a very common mistake and when mortgage underwriters catch this during the mortgage process and the borrower does not meet the mandatory waiting period after foreclosure and/or deed in lieu of foreclosure, this will turn into a mortgage loan denial.
Avoiding Stress During Mortgage Process: Teamwork
The first and most important thing in the mortgage application process is for the mortgage loan originator to thoroughly qualify the mortgage loan applicant prior to issuing the pre-approval letter. There are many lives at stake on a home purchase. The buyers, the sellers, the buyer’s attorneys, the seller’s attorneys, the buyer’s realtors, the seller’s realtors, the title company, the appraiser, the loan processor, the loan underwriter. A less than perfect pre-qualification and pre-approval will not just affect the lives of these folks but waste everyone’s time and create stress during mortgage process for everyone, especially the home buyer. The home buyer will be making plans in moving, hiring movers, changing schools for their children, and so will the home sellers. There are so many different case scenarios with every mortgage loan applications, especially for borrowers who had prior bad credit issues and higher debt to income ratios. If a mortgage loan originator has questions or foresees a potential hurdle in the mortgage application, then he or she should have the underwriting department review the file prior to issuing the pre-approval letter. Mortgage loan borrowers should understand that to avoid stress during mortgage process, teamwork and proper communication with the loan officer is of utmost importance. Many times when mortgage underwriters are not clear of the mortgage lending guidelines, then they should consult with HUD and/or Fannie Mae with the loan officer to get clarification. Proper due diligence prior to the issuance of the pre-approval letter is the road to a solid mortgage loan approval and the road to the finish line of closing on the home loan with style and avoiding stress in mortgage process.