Get The Most Out of Your Lender
There are many variables in every mortgage loan. To make sure your loan officer or mortgage broker gets you the right loan, clearly communicate what you want to accomplish with the new loan. If you are purchasing a home, are you wanting to preserve as much cash as possible, or are you more interested in keeping your new loan as low as possible so you can pay it off quickly? How much money are you able to put down? These are questions your mortgage professional is going to ask. The answers will affect what you’ll pay in interest as well as the ratio of your loan to value (LTV). Banks will typically charge a higher rate the higher your LTV. In other words, if you want a 100% loan, the risk for the bank is much greater that you might default on the loan, so your interest rate will be higher accordingly. Likewise, if you put down 20% you’ll have invested enough cash from your own pocket that the bank will be more comfortable with lending to you, therefore your rate will be significantly lower.
Along with communicating clearly, you must make sure your mortgage professional has the whole picture. For example, if you’ve had a bankruptcy, foreclosure or liens on your property, or you won’t have the down payment until your current home sells and closes, he or she must know this to package your loan properly and get it approved without having to resubmit it several times. Giving your loan officer complete, accurate information is critical to streamlining and speeding the process. It could even mean the difference between getting the loan you want and no loan at all.
Be sure to provide requested documents in a timely manner. Usually, most of what your loan officer will need will be requested of you upfront. However, banks will sometimes want to clarify a debt or an asset with additional information or paperwork. This is often because they sell the loan to a lender who has their own requirements. These requirements can and do change from time to time, often making it frustrating for all involved. Be aware that your mortgage professional is only going to ask for items necessary to complete the loan transaction.
Ask questions, but don’t monopolize his/her time. This might seem unnecessary to include, but while your loan officer is anxious to make sure you understand the process and keep you happy, they have other customers who likewise deserve their attention and time. Your loan officer will also do his/her best to minimize calling you unless necessary, or to give you good news regarding your new mortgage loan.
Offer your help if it will speed up the process. In our post 9-11 world, companies and banks are less likely to share your information without your authorization. Many require your physical presence to give your personal banking information. While this information may be obtained in writing, or through a fax, it is sometimes urgent to get information in a hurry to expedite your loan. This may be the case regarding verification of deposit or verifying employment through a third party, such as the work number. Most of the time, they can get what is needed without bothering you, but if they can’t, you’ll get a call.
While it is always your option to shop for a better loan elsewhere, don’t endlessly shop your loan or make large purchases before your loan closing. I’ve seen people unwittingly sabotage their own loan by going out and purchasing a truck on credit, or furniture for their new home, and kill their mortgage loan by ruining their credit and their debt to income ratio ( DTI).
Finally, and this I would make priority one. Choose your mortgage professional wisely. This should be a person with whom you feel comfortable and confident. He needs to be someone you can trust to give you sound advice, and look out for your interest throughout the loan process. He needs to be someone you know well enough to trust their advice regarding your mortgage. He should be knowledgeable yet approachable. He should be available to consult with even after the transaction is complete. You want a mortgage professional who can guide you throughout your mortgage lifetime and with every new purchase as well. You want a true mortgage professional.
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