One of the many roles your mortgage professional should play for you is helping clear up some of the misconceptions around the process. Even though mortgages, the processes related to them and the regulation of them changed quite a bit in recent years, mortgage misconceptions still persist.
I don’t need to supply every document my loan officer requests: The loan process in the current world has become complex. Now more than ever lenders are asking for greater amounts of documentation. Your loan officer should provide you a detailed list of the documentation required after you have completed an application. It is important that you provide everything requested in a timely manner.
If you forget or miss one document, that can delay the entire process. One of the biggest mistakes I see is failing to provide every page of a bank statement. Even if the last page is blank it is imperative that it be included. Don’t be surprised after initial underwriting approval that there will be additional information requested from you. Don’t drag your feet. Follow your loan officer’s lead.
The lowest rate is always best: It’s not always about the lowest rate but what it costs for that rate. If you have sacrificed a large chunk of your home’s equity and paid thousands of dollars in costs for a rate, it could have a negative impact on your loan for years.
A seasoned loan officer will complete a thorough review of your situation to best understand your goals. From there, they should provide you several options varying in rates and closing costs.
You may also qualify for an option in which the lender pays your closing costs (not rolled into loan). Your loan officer should walk you through the numbers so you know exactly what impact each scenario has. Don’t be afraid to ask questions. Understanding your options is key, and your mortgage pro’s job is to match you with the right loan and make sure you understand it and the alternatives.
I will have my mortgage for the entire loan term: Don’t feel like you are stuck in that 30-year mortgage forever. It is important to have a relationship with a loan officer that practices mortgage management. A good rule of thumb is reviewing your mortgage with your loan officer annually. There can be many reasons to refinance your mortgage, from lowering a rate and payment, pulling cash out, getting rid of PMI (private mortgage insurance), or even reducing loan term (length). I am always looking for opportunities to improve on my client’s mortgage loan.
Most people typically have a financial advisor to help manage their assets. Not unlike that relationship, you should establish a relationship with a trusted loan officer that knows you and understands your goals. Goals can change. Circumstances change. So, before making any big financial decision reach out to them. They should also be reaching out to you regularly.
A pre-qualification letter is the same thing as a pre-approval letter: No, a pre-qualification is a letter indicating that you are qualified based on the basic information you have provided your loan officer. A pre-approval letter is provided when you have submitted an application, income, and asset documents so that an underwriter can review and make a loan decision.
In today’s world sellers and agents love the pre-approval letter. Once you are pre-approved all you really need is a property to buy. The process is much quicker once you go under contract and this can be the difference between your offer being accepted versus someone that just has a pre-qualification letter winning the home. Make the effort, invest the upfront time in getting pre-approved and it will pay off.
Brook Benton (NMLS #6049) is a Vice President and Mortgage Banker with Atlanta-based PrivatePlus Mortgage, which does business nationally. He has over 18 years of industry and can be reached at 678-643-0864 or BBenton@PrivatePlus.com.