Will YOUR HOME drain the lifeblood of your finances?
Say you decided to purchase a new home, or refinance an existing property. You submitted a few online quote requests, and your phone is ringing off the hook with offers. Making the decision on who it is best to work with is not always done for the right reasons (look into my eyes.. )
Here is a list of the 5 most common things that should always trigger a red flag.
1. Charging an application fee
Application fee? … Really??
With all the lenders to choose from, you’re gonna go with the guy that won’t give you his time unless you fork over some money?
Application fees are a way of getting around the law that says that a borrower cannot be charged anything other than a credit report fee until he signs the initial lender disclosures. Your application fee is usually used to pay for the appraisal, but the fact of the matter is: you are being charged before you see the actual lender numbers. How likely are you to switch lenders after you handed the mortgage company 500 non-refundable dollars – of your hard earned money!?!
Some companies ask for your credit card information at the time of the application, but only to pay for the appraisal when the time comes. This is a much more acceptable practice, giving the mortgage company some peace of mind that you are serious, and not just wasting their time and resources.
2. Not giving pricing information until you submit an application and/or provide additional documentation
This is also a strategy to get and hold on to your business. It takes some level of trust to give out your personal information, and that trust is hard to break when established. Once a borrower submits an application, he/she is less inclined to apply or even talk with other companies because of the fear of too many credit inquiries, or the above mentioned trust. It’s a mind game.
You should be able to obtain a fairly accurate quote as long as you know your aproximate credit score and desired loan amount. If your loan officer doesn’t have the patience to provide you with one, don’t have the patience to waste your time sending him documents. Look elsewhere.
3. Promising a fast loan closing without a written timeframe on the exact process
You’re in a hurry, that’s obvious. Lucky you, you’re in the right place!
Closing a loan fast depends on 3 things:
- how fast you provide requested documentation
- your loan officer and the procedures that the mortgage company has in place
- how responsive are the third party companies involved (appraiser, title company, insurance company
If you’re on a deadline, make sure your loan officer is responsive and available, but also ask for a detailed timeframe of the loan process (and hold him to it!). What you want to look for is something like this:
- Disclosures – within 3 days of submitting your loan application.
- Underwriting – submitted within 24h of receiving the signed disclosure package, as well as basic documentation such as: tax returns, bank statements, employment information and assets. It is very important that you are able to get your file into underwriting while the appraisal is ordered and performed – this will significantly speed up the loan process.
- The appraisal is ordered and paid for as soon as the initial disclosures are signed – it should take 1-2 days for the appraisal to schedule, and 3-5 days for the report to be back (some appraisers are fast and some take longer).
- Re-submit to underwriting as soon as the value appraisal comes back satisfactory. At this point, you should already have your conditional approval and all the documents requested by the underwriter. If everything is organized right, you will get a clear to close.
- Give it another day or two for closing docs, meet with the title company and sign the paperwork.
don’t waste your time if all you’re getting is a vague promise over the phone that “we will get it closed, don’t worry”.
Most big companies have “efficiency” procedures in place where your loan is queued for every little step. Even something as simple as ordering the appraisal might need to wait a few days until the processor gets around to working on your file. And no, your loan officer won’t admit to this.
Get it in writing – at least you’ll have some ammo for your legal complaint to the Utah Division Of Real Estate if things go south.
4. Really good interest rate, only if you apply RIGHT NOW
As in, before the golden carriage turns into a pumpkin, or you come to your senses.
Creating a sense of urgency is the most common sales tactic, and pressure selling is associated with numerous bad deals and endless regrets and frustration.
Unless there is a documented significant economic event that can impact market conditions, it is very likely that interest rates will be the same tomorrow.. and the day after… and the day after..
5. Evasive answers or “playing dead” (pun intended)
This is most common after you submit your application, and sign the initial disclosure package.
All of a sudden your loan officer is so busy that he has no time to return your voicemails or give you updates. This after he called you every single day for two weeks just to “touch base”!
You’re either dealing with bad customer service, or truthful answers will cause the loan officer to lose your business. Buying into the excuses just means trouble further down the way – Get a Second Opinion
Lessons learned?
Shop around. Don’t feel bad about asking detailed questions. Trust your instincts. Email your questions to [email protected]
And if trouble does run into you, look for solutions, and demand answers. Don’t jeopardize your financial well-being by putting it in the wrong hands – it’s a lot easier than carrying around garlic!
And if your current mortgage company already got a taste of your blood.. read the 5 Signs You Should Ditch Your Mortgage Loan Officer
