When It Comes To Borrowing, Patience Is A Virtue

Date March 15, 2016

These days, perhaps more than ever, having patience is most definitely a virtue. And from where I’m standing, nowhere is patience needed more than when you apply for a mortgage loan. Whether you are looking to purchase a home or refinance your home, being a borrower in today’s market may make even the most tolerant among us lose our cool.

However, that does not mean you should shy away from purchasing or refinancing. Interest rates are still low and home prices are more or less stable. Instead, what it means is that you should be prepared for your loan approval and funding to take at least a month and you should expect curveballs to be thrown your way during the process.

The first thing to prepare for is the fact that, online, you may see interest rates that are absolutely incredible. However, what the fine print may or may not explain is that those rates apply to 15-day lock-ins for borrowers with very high credit scores and a lot of equity. This sounds great at first glance, of course, except for the fact that it is next to impossible to fund a loan in 15 days especially given the changes in the lending industry.

The reasons these quick turnaround loans are impossible are many. First, new rules mandate that before you can be charged for an appraisal on your home you must acknowledge and sign certain disclosures. This means you must receive and understand your new “Know before you Owe” disclosure before the appraisal takes place at your expense.

A delay that might occur is with the appraisal itself. It can take days for the appraiser to view the property. Moreover, unless your agent is there to educate them on comparable sales in the area where you are buying, the appraisal may come back grossly inaccurate. It is important to note that your mortgage professional is not permitted to select your appraiser. Appraisers are randomly selected from a panel and, unfortunately, your mortgage professional cannot guarantee that the appraiser is from your area or even familiar with your area. Nor can we guarantee that the appraiser selected will be the most experienced available. That is why you’ll need to rely on your REALTOR® to ensure that your appointed appraiser is professionally educated about home prices and sales in your area as an inaccurate appraisal will certainly present another delay.

Next, you need to be prepared that the lender will request copies of almost everything except your first-born. Your income tax returns, pay stubs, investment account statements, bank statements and proof of any other income you have will be required. My advice to prevent delays during this stage is to have copies of everything ready before you apply for your loan.

Finally, whatever you do, do not make a big purchase on credit anywhere near the time that you’re applying for a mortgage loan. The lender will run your credit right before the close of escrow and a debt appearing during the escrow period may lower your score or cause your overall debt to increase which, in turn, can throw off the approval.

Do not get me wrong, it’s a great time to buy a home or refinance, just do yourself a big favor and prepare for the process to take a minimum of 30 days. Prepare your documents before applying for a loan. In addition, remember, your mortgage professional wants to close your loan for you as quickly and seamlessly as you, so we’ll do everything in our power to move the process along, as expediently as is reasonably possible. Happy house hunting!

Find out more about Matadors Community Credit Union’s Home Loans!

Fred Kreger, CMC is the Branch Manager at American Family Funding, a Division of American Pacific Mortgage. He is a Past President for the California Association of Mortgage Professionals (CAMP) and currently the President-Elect and Government Affairs Vice Chairman for NAMB, the Association of Mortgage Professionals. He can be contacted at fred.kreger@affloans.com or (661) 505-4311.

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