3 Mistakes That Can Turn Your Mortgage Loan Process Into A Nightmare
True Story: In the early 2000’s, a study was sponsored to identify the most stressful events that people endure throughout their lives. The biggest shock of the results? They found that people sitting in the lobby of a bank waiting to speak to a loan officer about a mortgage had more erratic heart rates than astronauts sitting in a rocket waiting to be launched into space!
Think about that for a moment… You’re more likely to be stressed out waiting to chat with little ol’ me about a home loan than astronauts are stressed about the fact that they’re sitting on millions of pounds of volatile explosives, waiting to be launched into an oxygen-less environment where the simplest of mistakes can kill you!
The first time I read that study (Years ago) – It opened my eyes to just how intimidating the mortgage process can be. Your hopes and dreams are attached to that one process. And the ever-looming threat of a “Nope! Can’t do the loan” is enough to keep you awake at night! “What if this happens? What if that happens? Should I buy furniture yet, or will I be stuck with it if the loan gets turned down”!? With so much that can go wrong, why take any action that could make things even more stressful?
Follow this advice, and you’ll avoid the most common mistakes I see borrowers making that adds to the stress-level:
- Waiting Too Long To Speak To A Loan Officer
Here in the mortgage industry, we refer to this as “Ready! Fire! Aim”! – Haha – We say that because waiting to speak to a loan officer after you’ve found the home you want to buy makes about as much sense as aiming a gun after you’ve already pulled the trigger. See, many industry reports tell us that as much as 70% of all credit reports have errors on them. Many of those errors could be dragging your credit score down, and take 1 – 2 months or more to correct.
So let’s say you spent 4 – 8 weeks hunting for your ideal home (That’s average house searching time) and you finally find that perfect home and you’re eager to make an offer! Well, right about now is where the seller is going to ask for a letter from your lender confirming that you’re approved for the asking price of the home. In fact, sellers ask for this before they’ll even consider your offer.
This is where many home buyers rush to speak to a loan officer, and tell us how they need a letter ASAP before someone else makes an offer and snatches their dream home away… Statistically speaking, we’re likely to find something wrong on your credit that is in need of repair right about now, and until it’s repaired, you’re not “purchase ready” in the eyes of the seller. This is when most buyers begin to freak out, and beg us to speed up the process, and do anything we can so that they don’t lose the house.
See why we call it “ready, fire, aim”? What could have been a relatively calm and routine process was transformed into rush, rush, rush because the home buyer in this scenario didn’t take the time to speak with a loan officer before he/she under the time crunch. Save yourself the headache and speak to a lender (Cough, cough, ME, cough) sooner rather than later… Now, I’m just going to slip this random # that may, or may not be my direct line right here: NUMBER HERE
2. Pulling Their Own Credit
This one ties in nicely with the above scenario. Often times when I recount the above scenario, a lot of borrowers will respond with: “Well I’m ok, because I already checked my own credit”. Right about now they’ll show me a self-pulled credit report from a website such as freecreditreport.com – Or something similar. That’s all fine and dandy. In fact, I recommend you give yourself a pat on the back if you’ve done your due diligence and kept tabs on your own credit.
However, here’s big kick in the gut that most consumers haven’t been told about… The credit report that you see when you request a free report, is not the same credit report that a mortgage under-writer will see! I know it’s crazy, but it’s true. A mortgage under-writer pulls what is called a tri-merge report, and it’s far more inclusive and detailed than what you see. Ever heard the saying “the devil is in the details”? Well in this case, it couldn’t be more true. Those details are often where we find the errors that need to be taken care of ASAP.
So once again, I’m recommending that you speak to a loan officer early, if for no other reason than to have a full credit analysis performed to avoid stress and headaches later. (Interesting side-note: My phone # hasn’t changed in the last 9 minutes it took me to type this… Just saying…)
3. Not Asking Enough Questions
I’ve been at mortgage lending for a very long time. If I were asked what the #1 question borrowers want to know is, I wouldn’t even have to think about the answer: “What’s my rate, payment, and closing costs going to be”?
Yep, those three questions seem to be the only factors many borrowers are interested in, and unfortunately this often blows up in their faces. No, I’m not suggesting that you shouldn’t care about these three things… I’m not crazy! (My mother had me tested… 5 points to you if you know where that’s from!)
Seriously though, there are so many factors that need to be considered when picking out a home loan that’ll work best for you. Shopping for bargain basement rates and closing costs sounds thrifty on the surface, but in practice it often lands you with a mortgage that you will later seriously regret.
Think of it this way. Let’s say you needed a serious medical procedure – One that could have some serious consequences on your health and ultimately your life. How would you feel about picking out your doctor or surgeon by asking “well, how much is it”? Wouldn’t it raise red flags if you suddenly ran across a surgeon who was willing to put you under the knife for a bargain basement fee?
When someone is so desperate for business that they offer to work for the lowest fee possible, it’s usually a warning sign right? Because those who are genuinely good at what they do are often busy, and know their true value. Whereas someone desperate for business is desperate for a reason… This does not mean you shop for the most expensive offering either. Rather, it means you shop for the best value, which is a combination of a great loan, excellent skill-set, and someone who you feel comfortable with.
The only way to figure this part out, is to ask a lot of questions. Put the loan officers knowledge to the test by asking him/her to explain the paper-work to you, describe the overall long term cost/benefits/savings. A true professional will do so with a smile, and make it easy to understand. Whereas someone who is just “winging it” will struggle, and gloss over most of the details leaving you confused, and wondering which loan makes the most sense.
There you have it! 3 simple ways to avoid making the most common mistakes that turn your mortgage process into a nightmare! Now here’s the part where I engage in a little shameless self-promotion. Haha – I’d be honored if you’d give me the opportunity to earn your business. I firmly believe that if we chatted for just 15 minutes on the phone, you’ll get a good feel for how I do business, and you’ll know if you want to work with me or not.
I don’t engage in pushy sales – I am here to answer questions, inform, and prove my value. If this sounds good to you, here’s how you can reach me: (951) 970-5034