The mortgage approval process is the same step-by-step adventure for just about everybody. Lenders endeavor to construct Qualified Mortgage (QM) loans by carefully coloring inside the lines of the CFPB’s Ability-To-Repay (ATR) underwriting guidelines. The target results are high quality loans with timely repayment not subject to potential buyback from Fannie Mae or Freddie Mac. That’s the goal; good loans that are properly constructed resulting in timely repayment, reduced default risk and no looming buyback threat.
To do that, there is a structured and consistent process that mortgage loans undergo to evaluate and vet borrower profiles, and to determine if the collateral (the house, condo, co-op, etc.) is worth what it’s supposed to be worth. There isn’t much you can do to cajole and influence how fast your loan moves along the mortgage approval assembly line, but there are things you can do that will eliminate unnecessary extra steps and delays that tend to prolong that process.
Herein are 5 ways to speed up your mortgage approval:
1) Full disclosure / no secrets -the mortgage vetting process is rigorous and there are now lots of ways that lenders uncover information that you may have thought was safely buried at the bottom of the sea. Confess everything, keep no secrets, full disclosure early on will give you and your lender the opportunity to evaluate whether past misdeeds are deal killers or just need extra attention to overcome. Too often borrowers hoping that some long dormant credit mishap will stay under the radar, suffer unnecessary 11th hour histrionics that can jeopardize their closing while their lender sorts out these undisclosed surprises. If you think you may have credit skeletons in your closet, come clean early, plead guilty and throw yourself on the mercy of the QM court. Whatever it is, it’s not going away on its own and it has to be addressed.
2) Be “all-in” with document requests – mortgage getting is all about documenting the information used to approve your loan. Find out what your lender needs you to provide and give them every page of every anything they ask you for, and then when they ask for more stuff, stop what you are doing and get it to them. This is the #1 reason that the loan approval process bogs down. For the most part, if your lender didn’t need it, they wouldn’t ask you for it, realize early that the mortgage approval process is document-centric and go all in. Spending a couple of hours assembling your complete, nothing-is-missing-that-you-know-of document package, will save you precious days you might otherwise wish you had when your closing date is in jeopardy.
3) Find out who your processor is and become best friends with them – once you have formally applied for your mortgage, a processor will quarterback the information verifying, document getting, property appraisal and all other aspects of coordinating your loan approval adventure. Your processor is your best source of status information and is the frontline interface between you, the underwriter, the appraiser, the closer, even the loan officer that originally helped you get started. When you find out who this person is, call them on the telephone, introduce yourself and offer up any assistance they might need from you, the appreciation and results will be remarkable.
4) Conclude negotiations with the seller early on – issues can arise out of the home inspection that may result in post-contract negotiations between the seller and the buyer. Back-and-forth arbitration can drag out for weeks before financial resolution can be agreed upon by both parties, and then once an agreement is reached, a contract addendum signed by all parties has to be drawn, executed and delivered to your lender. This is an important piece of the home-purchase-mortgage-lending puzzle that is often regarded as a last minute, minor detail. But closings are often jeopardized because of prolonged seller credit negotiations, and a last minute scramble to get an addendum full of signatures to lenders for final review. Negotiate early, come to an agreement and be done with it, you have a closing to get to.
5) Tie up loose ends as soon as you know what they are – almost every mortgage loan commitment comes with “conditions,” which is code for more documents and information. Whether it is a copy of a canceled down payment check, evidence of your homeowner’s insurance or some other QM essential puzzle piece, embrace the fact that you are at the finish line and these pre-closing conditions are all that stand between you and your homeownership trophy.
One last thing; if you do these 5 things and your mortgage gets approved and closes quickly without a lot of drama, and then you tell all of the people in your universe about your mortgage getting experience, you can expect them all to say pretty much the same thing: “I wish I had done that.”