LETTERS From CAMP Rehoboth |
The Mortgage Loan Process: It's Not What it Used to Be! |
by Cheryl Normandeau |
The mortgage loan process today is not what it used to be just a few years ago. Until just recently, a trip to your local bank to begin the tedious process of submitting a mortgage application could bring an average person to tears and fears of personal invasion. Today, there are so many brokers, bankers and consultants and so on and so on, that your head will spin. As our society has entered an age of "service to the customer", certain companies have made decisions which uniquely provide a better and quicker service to you, the customer. With the onset of technological advances, the process now has a streamlined effect. Todays process now involves some very simple steps for the average customer seeking a mortgage. In most cases, the time it takes to receive a loan commitment is less than 48 hours from the time of document submission. Let me explain how this process works. Step One. Initial Interview and Analysis Whether by phone, mail or in person, an initial interview will involve discussion of criteria used to determine the amount of mortgage a person will qualify for. During this discussion, the mortgage consultant will first put you at ease. Everything, and I mean everything, will be confidential. You will be asked about your monthly or annual income or both. A recent pay stub and last years W-2 will suffice. You will also be asked about your current monthly debts. Current mortgage payments, car payments, and other types of monthly debts are discussed. After this information is discussed, a quick analysis of debt to income is determined. The outcome will provide answers to one of the most common questions: how much can I afford? Step Two. Type of Mortgage Now the discussion will turn to the type of mortgage to fit your personal needs. A good interview will bring out information about your personal needs and most likely some goals. With this information in hand, the discussion will determine whether you should be in a 15 or 30 year, an adjustable rate, a balloon mortgage or many other types of packages. Todays mortgage products available are so numerous that it takes a skilled professional to help design and create the right package for you. Maybe youd like a little more house but you just wont qualify for a higher payment? There are some programs available that provide lower payments for a set period of time. People today grow within their employment; why not let their mortgage grow with them? As an example, Norwest Mortgage has one program with 1700 possible combinations! Remember, you only go through this process a few times in your life, so the type of mortgage should be "right" for your personal needs. Step Three. Documentation By this time, you should feel a little less intimidated by the process. Youve established your qualification range, know which mortgage package is right for you, and you will have a sense of confidence. The documentation part can be really scary to people. You are sharing some very important information. You will authorize someone to complete a credit check report. Let me put you at ease. Everything will be held in the strictest of confidence. Information regarding income and debt, assets and liabilities are all part of the documentation. You can be an active participant by providing documents (originals) that you already have. This will save on the third party re-verification involved with the older tedious process. For example, Norwest Mortgage has a program called Rapid Track that is designed to make the mortgage approval process faster and easier for everyone. Just bring with you original copies of a current pay stub, last years W-2, and current bank statements. This along with other information gathered at the interview is part of the package needed for the decision. With the advances of todays computers, the skilled mortgage professional is able to complete this part in no time at all. Soon after your discussion, your application and other paperwork is spitting out of the printer. Your mortgage professional will then review all documents, answer any questions you may have, complete the signatures and package the file for underwriting. This is where the decision to loan or not to loan occurs. The skilled mortgage professional should have ascertained a good feeling for this already. The underwriting process is a step of final decision and verification of all documents, and in some companies will be completed in less than 48 hours. Step Four. Commitment Letter Once underwriting has completed verification of all documents and approves the mortgage, a commitment letter is sent out. You will receive a copy of the same. Sometimes, there are contingencies associated with the commitment letter. These are usually items such as pay off of an existing mortgage, copy of title search, acceptable appraisal, and others. At this time, it is all downhill. Your attorney will help you meet these obligations, as well as establishing a settlement date. Step Five. Settlement You will attend settlement on the date established. Your attorney will explain all the paperwork involved. All paperwork will be signed with necessary copies going to respective parties. Thats it! You will walk away with a new set of keys. Step Six. Thats it! Youve made it: The mortgage process is made up of some very simple steps; the initial interview and analysis, type of mortgage to fit your needs, documentation, commitment letter, and settlement. Unless you have an extremely complicated case, the average person can complete this process in a very short time frame. Your mortgage professional will be organized and in tune with your needs. You should never walk away feeling confused and frustrated from a discussion with a mortgage professional; it is their responsibility to make you feel at ease, take away the confusion, and enable you to feel confident about your position of qualification. Cheryl Normandeau is a mortgage professional for Norwest Mortgage, Inc. in Rehoboth Beach, Delaware. She can be reached at (302) 226-1865 in the area, or (888) 217-5700 from out of the area. |
LETTERS From CAMP Rehoboth, Vol. 8, No. 6, June 5, 1998. |