Lending can often be synonymous with frustration, four letter words, and horror stories that often defy logic. The root of many lending issues starts with the pre-approval process because pre-qualifications & pre-approvals are based on verbal conversations and not the actual facts. Compounding the problem is a buyer’s reluctance to speak with a lender and provide the lender with the documentation required to make an informed decision. Unfortunately this leads to rushed decisions by the lender, over qualifying buyers, missed details, and loan denials.
The mortgage industry in these situations shares a significant amount of blame due to their reluctance to change their file flow process and adapt to the challenges presented by the CFPB’s new TRID guidelines.
Recently a few lenders have embraced the challenges in the current lending market and allow a buyer to have their loan fully approved prior to finding the right home.
So, why is that important? When making the largest purchase in your lifetime would you want to be 100% certain you are approved based on your credit, income, and asset profile, or 70%-80% sure based on verbal documentation? This also allows you to close in as little as 10-14 days as apposed to 45 days on a traditional process.
Marshall Walker answers this - "we see so many pre-qualification letters from lenders that actually say that this pre-qualification is based on a verbal communication and is subject to credit, income and asset verification. We have to tell our sellers that this means that the lender has not even pulled a credit score on their buyer." Walker also says "I cant tell you how many times we see buyers stymied in the loan process because they forgot to tell thier lender that they took so many non reimbursed expenses on their taxes that they show insufficient income to purchase - Don't you want to know this might be an issue prior to purchase?'
“To be determined” underwriting allows a homebuyer to apply for a loan, be approved, and eliminate any uncertainty regarding their loan approval before looking for a home.
Having a loan approved prior to finding home provides peace of mind, an aggressive pre-approval or commitment letter that stands out in multiple offer situations, completes 90% of the loan process upfront, and makes life infinitely less chaotic after ratifying a contract. in fact a loan that is fully pre-approved by full underwriting allows your offer to compete with a cash offer. (speak to your agent about this)
The other alternative is to stay in the old format, find the right home, have a home inspection, termite inspection, select an insurance agent, an attorney, and then start the loan process…
Which sounds less stressful to you?
Let us guide you through the home buying process...... Start here by beginning your new home loan process.