A 2018 survey revealed that 42 percent of home buyers found the mortgage process “stressful” and 32 percent described it as “complicated.” As lenders, we work every day to try and drive those numbers down, but we could use the agents help. When it comes to having a successful home loan process, there are several do’s and don’ts you can share with your clients to help minimize the stress of getting to the closing table.
Make sure your buyers are pre-approved rather than pre-qualified. A pre-qualification is a review of financial information provided by the borrower, with no documentation to verify. A pre-approval includes a credit check and verification of income and assets, and therefore holds more weight for sellers. At Fairway, we offer our clients a full approval prior to finding a home. This provides them with a true mortgage commitment and makes them a stronger buyer in a competitive situation.
Make sure your buyer knows where their down payment is coming from before applying for a home loan. Additionally, money used for down payment can only come from very specific sources and must be documented. Moving money into and out of different accounts during the loan process can result in additional documentation, which can be cumbersome for the borrower.
Make sure your buyer understands the need to pay all bills on time, particularly during the mortgage process.
Make sure your clients do not open up new lines of credit to purchase furniture or appliances for their new home until after the closing. Co-signing a loan, or anything else that could ding their credit or increase their debt should be avoided.
Make sure any job changes are discussed with their loan officer before application. Typically, the lender wants to see two years of consistent income history from the borrower when approving a loan.
If you become aware of either of the above circumstances during the loan process, make sure to have your borrower contact their lender immediately. The lender is required to do a soft credit check up to seven business days prior to the closing, along with a Verification of Employment for the borrower(s) prior to closing. Any changes to the buyer’s status that this reveal could derail the purchase.
Working together we can minimize the stress for buyers and instead keep the focus on the excitement of buying a new home.
Betsy Boggia is the New England Regional Marketing Director for Fairway Independent Mortgage Corporation, one of nation’s top five residential lenders.