With more than 15 years of experience in the mortgage industry, Rebecca Mott, the vice president of mortgage lending and new construction specialist with Guaranteed Rate, has come to understand the do’s and don’ts of lending. As an expert in her field, Mott has identified three major reasons why loans fail to reach completion, and what agents can do to prevent them.
1. Agents take clients out to view homes and write a contract without first having a loan officer pre-approve a loan with asset and income documentation from the clients.
Mott emphasizes the importance of the pre-approval process, as it allows the loan officer to accurately calculate a client’s income and verify where the funds for closing will be coming from. An offer written on a loan that doesn’t have supporting documentation is not 100 percent guaranteed, and it can prevent clients from being properly approved.
Mott suggests agents should recommend to clients a lender that gathers information prior to issuing pre-approval to ensure it is accurate, and then wait to view homes with clients until pre-approval is received.
2. Loan officers are not clear with borrowers about the peaks and falls within the loan process, as well as the expectations and proper documentation that is required.
While loan officers need to set proper expectations for clients, agents should explain to their clients the great deal of documentation that is required when obtaining a loan. From there, clients need to carefully read or listen to what is being asked of them to ensure they send in accurate information.
It is crucial that clients supply the loan officer with the most accurate information, and agents should not exclude information in hopes that the lender will not find out, Motts said. To be certain all information is accurate, clients should read the detailed requests lenders send, as items requested can be very specific.
3. Clients take their time sending the loan officer items requested, which delays their approval.
According to Mott, on average, once all the items from the client are received, it can take an additional day before the file is approved with conditions and then another two days before a clear to close can be issued.
In order to prevent frustration, agents should explain to clients the expectations that are associated with getting a loan, and loan officers need to give clients an accurate timetable of what is expected throughout the process. In turn, clients need to be willing and able to send documentation to the loan officer in a timely manner. For instance, clients should reply promptly when a loan officer reaches out to them.