Now that the real estate and mortgage markets have totally collapsed, it is a good time to really ponder what kind of people you are dealing with when getting your home loan. Quite obviously using reputable, honest and educated professionals is the way to go now. You need to screen the people first and understand who they are. There needs to be a certain trust level, but you also need to follow their lead. While getting a mortgage is now even harder and more frustrating than ever before, you probably should not blame your loan officer for the things outside of their control.  I have outlined five things that we have never encountered before, that we (industry and clients) have to address every day.

 

1.    You need more paperwork!

 

When getting your documents together for the mortgage process takes you a full day of digging and copying, try not to blame the others especially your loan officer. Since the mortgage process had gotten so difficult over the last few years, it is not your loan officer’s fault. The banks now require more paperwork, more tax returns, bank statements, explanations, eye teeth and first born. You need to sign as many papers and disclosures during the loan application as you do at the closing. Not the loan officers fault! New disclosures come out every day that needs to be addressed, explained and signed. It is gruesome! Best way to deal with it is to get all fo your paperwork upfront and then just keep it coming…..

 

2.    My house is worth way less than it was two years ago!

 

Duh…. If you thought you bought the outhouse and it instantly worth the same as the Taj Mahal, get real.  In some parts of the country real property values are down 50% or more. In most areas, they are down an average of 10-20% if folks are lucky. So, did you really think your house doubled in value since you bought it.  This is not your loan officer’s fault that appraisals are coming in much lower than people think. It is disappointing and frustrating, but no need to yell at someone else for your poor dreaming. The biggest issue is that appraisals are now about 150 bucks more than they were. If your value is so low that the deal falls through you are out the fee for the appraisal.

 

3.    The bank rejected my loan application!

 

Banks are rejecting people that would have been the perfect borrower last year. Income levels, FICO scores, asset reserves and employment history just never seem to be enough anymore. The problem is, it is almost more of a crap shoot to get a loan approved these days. The rules change in the middle of the game and if you thought your client was a sure thing, they can be rejected on a dime. Worse, there are almost no alternative lenders to send the loans to. Most of the banks are out of the mortgage picture and those left all seem to feed from the same fruit bowl!

 

4.    What do you mean the size does not matter?
 

The size of your mortgage or house I mean…. When it was cool to keep up with the Jones’ a little while ago, now more budget conscious borrowers know that it is not wise to overextend yourself financially. You want to make sure that you have proper emergency fund and not all your income goes into your housing expenses. Banks have lowered the maximum allowed to borrow for a home as well as the maximum debt allowed for a housing expense. So, if the loan officer tells you your income will not qualify for the loan amount you want, he is not stupid…just knows the numbers. A loan officer that convinces a client to lower their mortgage amount is a good loan officer and may save someone hardship down the road.

 

5.    Is that the best you can do?
 
The same way you would not ask your significant other that, I suggest you do not do that while talking about the rate with your loan officer. Granted you want to know if you are getting the lowest rate out there but when an honest and hardworking loan officer hears this question it truly hurts his/her feelings. If you are an educated consumer and compare interest rates by going directly to the large bank sites, then you will know the rates. If your cousin’s best friend’s dog walker just got a rate that is lower than yours, well then they could just be better than you…or fibbing a little. Just be happy with what you wind up with and hope that the service is good enough to make the process less painful and you will walk away satisfied.

 

As tempting as it can be, people always think the grass is greener on the other side… if you find yourself in a situation where your neighbor said they a got a better rate than you or you get persuaded into going and getting a mortgage somewhere else… think twice!  A person can interview three loan officers and inevitable will want to go to the guy that offers them the lowest rate. If it sounds too good to be true, it is.  Remember, work as a team and things will be fine. Rates are the lowest they will be for a long time and whatever you get is better than what you will get two years from now……..and please, don’t shoot the messenger.

Dale Siegel