Question of the week: What tips do you have for smoother loan process?
Answer: This question came from a networking meeting last week, and the tips are very simple.
Be compliant with requests.
Despite the mortgage industry going to complete “full qualifying” since the market meltdowns in 2007-2008, many mortgage applicants still ask why they need to provide certain documents and forms because “we are obviously qualified.” Certainly, you are, we just need to prove that to an underwriter following the regulations and guidelines established by government and quasi-government agencies and individual lenders.
Since the Dodd-Frank Act in 2010 almost all mortgage packages have to show borrower’s ability to repay on a consistent basis; i.e. they have to show income that is available for payment every month. This means that just having enough money in the bank to pay-off your applied for mortgage does not mean you show m
When applying for a mortgage, have readily available, preferably in electronic format, if possible, paystubs, federal tax returns, letters or communications that detail your monthly income from pensions or government payments such as social security. Any income you receive, we will need to show proof and validation of the amount received.
All funds used in a transaction and, if necessary, reserves that will remain in accounts after closing, need to be verified for at least two months prior to the loan application. Checking, savings, investment, and retirement accounts will need to be documents with two months’ statements.
NOTE! All pages of your statements will need to be provided. If your statement says page 1 of 15, you will need to provide all fifteen pages, regardless of what is on each page. If page 15 of 15 is blank and states, “This page left blank intentionally,” we need page 15.
Again, we need the statements, not screen shots from your on-line banking website, the monthly statements.
If you own property, we will need copies of your mortgage statements,
property insurance declaration page and payment statement to verify the coverage, payment and also contact information for your insurance agent.
As we process your mortgage package, depending on the dates on the documents and forms you are issued, we may need to update some documents that are more recent. This is almost always the case with paystubs and quite often bank statements. As you receive any items for income or assets, save them for your loan package as they may be needed.
Often after reviewing a package an underwriter may request clarification of certain aspects of the file, such as a large deposit into your checking or savings that is not from your employer. We will let you know what we need and why.
Going through a mortgage application process can feel invasive to some, I have likened it to a financial enema. Every item we request is requested for a reason, the more information you are able to provide, and the faster you provide it, the easier your transaction will be.
Since the end of January 2020 when interest rates began to drop, our industry has been inundated with applications. This has slowed down the approval process dramatically. Providing items requested in a timely manner will ensure your file continues to move through the pipeline to closing and not get put aside waiting for those items and then getting back into line.
Our objective is to make the mortgage process as easy as possible, having financial records for income, assets and credit obligations readily available throughout your transaction makes the process a lot smoother.
Have a question? Ask me!
Other than a couple booking a wedding at The Plaza Hotel in New York, not many announcements are made two years in advance. Unless you are the Federal Reserve discussing interest rates. Earlier this week the Fed released an announcement that it was looking at increasing interest rates in 2023, with two rate hikes. Having a two-year runway before rates go up would not have investors making early bets with their funds. However, other statements in the announcement, combined with comments made by Fed Chair Jerome Powell in his news conference, triggered a sell of in bonds and mortgages that spiked rates mid-week.
“Inflation, inflation, inflation,” being bellowed by many economists, pundits, and yours truly (the voice the Fed could care less about), is reminiscent for many of us in a certain age bracket of Jan’s, “Marcia, Marcia, Marcia,” with about as much whining. Despite strong increases in consumer prices the last two months, trillions of dollars dropped into the economy from Washington with trillions more being debated in Congress, spiking wages costs for employers to lure workers, the Fed has been as consistent as Carol and Mike Brady with their messaging that the recent surge in inflation is transitory and will slow down in a month or two.
This week the Fed sort of, kind of, maybe acknowledged that inflation might rise faster and longer than expected—expected by members of the Federal Reserve. The official Fed position is its forecast for 3% annual inflation this year that will drop in 2022, a position it has held for the past three month. Recent releases show several members of the Fed’s Open Market Committee (the group that sets rates) are starting to question the forecast and are ready and will to act on rates before 2023 as seven of the voting members now see the Fed raising rates for the first time in 2022. Seven of eighteen voting members will not cause rates to increase, however in March only four members saw a 2022 rate hike.
Rates for Friday June 18, 2021: After the rate spike on Wednesday, conforming rates have tenuously settled back to last Friday’s level, whereas high-balance conforming rates are up slightly from a week ago.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30 year conforming 2.75% Flat
30 year high-balance conforming 3.00% Up 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
A lot of events this week. June 15th saw the transition of our state to being fully open and relaxing of mask mandates and requirements. Yesterday President Biden signed the bill to make June 19th a federal holiday, starting tomorrow, and Sunday is Father’s Day and the first day of summer. With celebrations planned in many communities tomorrow for Juneteenth, and Father’s Day Sunday, many families and friends will be openly gathering and enjoying being together in person rather than through a screen, our summer is starting on the right track to get closer to how we were in June 2019 than June 2020.
I hope all of you have a wonderful weekend and are able to enjoy your time with family and friends.
Have a great week,
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog