What do savvy home hunters have in common with the Boy Scouts? They both know the value of being prepared. That’s especially true for potential buyers when they seek pre-approval for a home loan. Oftentimes the difference between a fast approval from the lender and a process that drags on indefinitely is the preparedness of the consumer. Make no mistake—lenders are in the business of matching applicants with the best loan product, but nowadays that task can be made more difficult with increased federal regulations and the scrutiny that goes along with it. As such, customers can aid themselves tremendously by avoiding the pitfalls that could land their pre-approval requests in evaluation purgatory.
First, know that documentation is king. The lender isn’t singling your client out for additional scrutiny—these days everyone must provide detailed verification of their income and assets. Is your client self-employed? Then full disclosure of tax returns will be your client’s greatest ally. Does your client have a well-diversified portfolio? Then gathering all of financial statementsbefore meeting with a mortgage loan originator will go a long way toward a speedy approval. Remember, your client is demonstrating to the lender their ability to repay the loan, which goes beyond just the credit score, so make sure your client has everything needed to evaluate their overall financial profile.
Second, give your client room to breathe. No one should be rushed into a major financial commitment, and few feelings are worse than being caught off guard at the closing table by an aspect of the loan the client wasn’t expecting. A good mortgage loan originator should minimize those surprises, but clients also can be their own advocates by knowing the right questions to ask up front. Yes, the interest rate is a key component to any loan, but equally as important is the true cost of that rate and your client’s ability to protect it. Make sure they are provided with a concise estimate of all expected fees, and inquire about any rate-lock options that may help them hold onto a favorable rate.
Lastly, understand that a pre-approval letter is only as good as the paper it’s printed on. In other words, make sure when a lender “approves” your client for a loan, they are making your client a firm commitment. Most any institution can issue a preliminary letter based on a cursory credit check, but a fully backed pre-approval letter from a lender who took the time to understand your client’s entire situation can go a long way. Not only does it provide you and your client peace of mind, it also delivers an assurance to the seller that could be your client’s edge.
For assistance with needed information when meeting a mortgage loan originator, review this Purchase Transaction Customer Checklist from Capitol Federal®. It may be helpful in expediting the loan process for your clients.
http://www.capfed.com/content/dam/capfed/documents/PDF/checklists/Purchase%20checklist.pdf
