Are We Closing Tomorrow?

The moving truck is in the driveway and the call comes in…You’re not closing tomorrow. Dead silence followed by internal rage. How did this happen? Who is responsible? Why am I finding this out now?

Look, we’ve all heard about monumental changes to the banking industry and more specifically the mortgage market since the 2008 collapse. It is helpful to understand the process in order to scan the horizon for potential pitfalls and roadblocks.

First and foremost, virtually all loans are underwritten by an algorithm which assesses risk and makes loans available (marketable) to a government agency (FANNIE MAE, FREDDIE MAC, FHA, VA etc). Like it or not, one of the casualties in the financial collapse was the secondary mortgage market, where loans were bought and sold. Risk as well as regulations have all but eliminated that very vital market and now, the market of last resort, the Federal Government, is the only game in town. The algorithm is only as accurate as the information provided to it, therefore if information is put in wrong, the end result will be as well. At the end of the underwriting process, an individual, a real human being has to validate everything the algorithm tells it to. Some consumers don’t want to be bothered getting all their paperwork together for the initial application, while some bankers don’t want to “impose” on their customers by asking for these things. Almost every “closing surprise” could have been caught and fixed earlier in the transaction. For example a borrower tells their banker they “make $80,000 per year”. The banker puts that in the algorithm and gets a positive response. Later in the transaction when the banker finally obtains the clients tax returns they realize there is $16,000 in unreimbursed business expenses. Now there is a problem. This problem could have been easily avoided by open communication between banker and consumer. Here’s another example. Same borrower, instead of the unreimbursed expenses they have a 401k loan on their pay stub which is not detected on the credit report. Yep; another problem. Another client didn’t realize to mention they helped a family member buy a house or a car, bingo, a last minute problem.

These issues have a tremendous effect on the client, the seller, the title company, the insurance company and also the realtor (not to mention the banker).  And virtually all of these types of issues could have been dealt with at the onset.  My uncle once gave me advice.  He said, “There will ultimately be surprises in life, and for the most part, surprises are never good”.  It’s easy to look back in hindsight and see mistakes, however, next time banker A asks for more documents or more details than banker B, don’t assume going with banker B is the path of least resistance.

When can I get started?

Are you looking for your very best fit when it comes to mortgages? Whether you’re getting a new mortgage, looking for pre approval, refinancing or you’re starting from scratch, our team at Ace Mortgage Loan Corp. can help. For the very best assistance regarding your home mortgage in Pompano Beach, please call our team at Ace Mortgage Loan Corp. Call (954) 777-4774 today.

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