The most common questions of a mortgage loan are often a struggle for new and experienced buyers alike. Today, I answer those questions honestly to finally clear up the mystery.1. Why does one lender charge one rate and another lender charge another?
This is actually a two-part answer. Every lender, small or large, sets certain margins on mortgage rates. Margins are essentially costs for the lender for doing business. The second part to that question is that every loan officer has control over the rates they offer. Listen carefully on this next part because most loan officers don’t want you to know this. The higher the rate, the more the bank pays the loan officer for selling a higher than market rate. So when looking at why rates are higher at some places than others depends on both the bank and loan officer. More often than not the Loan Officer is trying to make more money by charging a higher rate.
2. Why does the loan process seem to take forever?
The loan process is actually quite simple and easy. However, most Brokers and Bankers either work for big companies and/or send the loan to large companies where the file sits for days on end waiting in a line, like at Disneyland. This can seem very frustrating and it is key to go to a loan officer who knows how to work the system, but better yet understands the possible road blocks and how to manage the process.
3. It seem like all the documentation requests never end - why?
Most loan officers do a poor job managing your expectations. Much like in the above point, the loan officer is in the middle between the client (YOU), and the bank they work for. Most often the loan officers don’t sit down or over the phone and gather everything possible. Most rely on a processor to request documentation from the clients. This adds days, and often the processor is not intimate about all the loan details and finds out weeks later when the underwriter request more documents last minute. This can all be avoided by going to an educated loan officer who not only manages the flow and process but manages the expectations of documents needed and collects them upfront.
4. How fast can I get my appraisal?
Most loan officers who work for brokers are not allowed to order the appraisal. They have to send in a full file and that can take a long time to get an appraisal done. Most loan officers who work for a mortgage banker, that closes and funds their own loans have the ability to request right away. Most often than not, most loan officers fall in the above category. They rely too much on the processor to order that for them. This can delay days and sometimes weeks.
Be careful of the above traps. They don’t seem like much, but they can add time and money in terms of the cost of your mortgage loan. Some simple questions that you can ask your lender in return can save you at the end when you are crazy scrambling for last minute documents or waiting in a never ending line to get your loan documents. Asking a few questions on the front end could save. Here is the best question to ask: “Do you need anything from me to start the loan?” If they say, “No, my processor will ask you for some information later, but we are good for now,” RUN to another loan officer. If they defer a lot of work on others, they aren’t doing their job and could cost you time and money. Another critical question is: How long will this take? If they say over 30 days, run. Most loan officers that get all the required info upfront can process, underwrite, and fund your loan in 2-3 weeks. This is the time you should expect. Add another week for a refinance for the recession period, a three day waiting period after you sign your docs and before you can fund.
I hope all this information helps you in your next mortgage loan. Please feel free to contact me to discuss your mortgage situation.
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