Factors That Can Derail Your Client’s Mortgage Application
As a mortgage professional, it is your job to help your clients not only secure their dream home, but also simplify the complicating loan process. To ensure that you move between stages without interruption, your client should be extremely careful with their finances, especially during the loan assessment period. Not knowing these things can quickly derail the mortgage application.
It doesn’t matter if your client’s loan is pre-approved. There is still underwriting process and making one of these three blunders can not only slow it down but may also lead to loan rejection.
As a mortgage specialist, you need to educate your borrowers so that they can avoid these inaccuracies that can disrupt their application.
Avoid New Line of Credit
Anytime your client applies for a new credit card or opens up a new line of credit following submission of their application, it disturbs the debt-to-income ration and affect the credit score. This is especially crucial if your client’s credit score is right on the border and even the slightest change can push it below the edge. The last thing you want for your client is to get a poor interest rate on their mortgage. However, in case of unforeseen expenses where your client has to withdraw money from their home’s equity line, then they need to inform the loan officer immediately. At the same time, you and your client will be required to show supporting documents and information about the new lender. This information is then passed on to the underwriters to keep the loan application on right track.
Using All the Credit on Credit Cards
Your clients may not know this but maxed out credit cards reflect very poorly on their credit scores and can make the mortgage lender look suspiciously at their application. This can get worse if each credit account reports to all the three credit reporting agencies. A well informed mortgage professional will advise his clients to spread their debt over multiple cards. If your client does not own more than one credit card, then recommend them to apply for more. This will help them reduce the balance on each card by spreading the debt, or consolidate the debt into an account that has higher credit limit. By doing this, your client’s account looks more credible to the lender.
Filing a Dispute on Credit Account
If you think that disputing your client’s credit report will do them any good, then you are wrong. While it is possible to do this before submitting the loan application, once the application has been filed disputing the credit account will slow down the process, if not derail it. As your client’s report reflects under “in dispute status,” it will be automatically ignored by the lender’s automated underwriting system, affecting the credit rating. Even though this can be fixed by requesting the credit company to remove their account from dispute, it usually takes time to get these things sorted. It is only after the status has been changed that the lender can rerun the automated underwriting to get it approved in the system. As a mortgage specialist, you must prepare your clients at least 90 days before they intend to apply for the loan and make them aware of these possible obstacles along the way.
The mortgage landscape is extremely complex and even slightest mistake can delay the whole process. However, with right guidance and expertise, it becomes possible to process these applications quickly and efficiently. Expert Mortgage Assistance has wide experience in outsource mortgage processing applications and has established a process to ensure quality service. If you are looking to eliminate application processing errors, get in touch with us now.