Constant Contact: How Much Is Too Much With Your Mortgage?
The major turning points in the mortgage transaction & what you should expect for contact from your loan officer.
Constant Contact: How Much Is Too Much With Your Mortgage?
Mortgages are a world of unknowns to the general population – For most people, you aren’t typically applying for a mortgage every day. Even a seasoned real estate investor can get tripped up every now and then as guidelines change and mortgage companies update their processes. So how much contact is too much contact? How often should you be talking with your loan officer during the mortgage process? What should you expect for response times?
Knowing where you stand in an unfamiliar process can provide immense comfort!
I’m going to define the prequalification stage as anything BEFORE you go under contract with a house. Perhaps you are reaching out to a mortgage broker to get an action plan in place 6 months or a year before you actually want to buy a house (it’s never too early to talk to a mortgage loan officer!). Maybe your credit score is low and you want to figure out the next steps.
In order to be fully prequalified for a home, your loan officer needs CIA – Credit, Income and Assets. If your credit is low, you haven’t been working very long or you don’t have any money saved – Don’t freak out. Your loan officer should be willing to work with you to put a plan together so you can buy a house down the road (whether that be a couple months away or a couple years away).
If you do have those 3 key pieces in order, your loan officer can get to work on determining what loan programs will best suit your needs and what purchase price you can qualify for. The prequalification will act as a road map to help you navigate what homes are within your price range. And depending on what loan programs you qualify for, there could be other factors that narrow the types of homes you should be searching for. For example, if you are prequalifying for a USDA mortgage, you will need to look for a home in a USDA approved area – these areas tend to be more rural or suburban. So it’s unlikely that you will find a USDA approved home in the heart of a bustling city.
During the prequalification stage, you probably aren’t going to have much changing. If you’re working on being able to prequalify, you’ll just be sticking to the action plan. If you’ve already prequalified, you’ll be working with a real estate agent to find a house you love. Contact with your loan officer will likely be sporadic but that doesn’t mean you can’t reach out to them at any point if you have a question!
If you are actively searching for a home, you’ll be touching base with your loan officer whenever you need an updated prequalification letter for a home you’re interested in buying. This involves sending your loan officer the full property address, estimated taxes and the purchase price you would like to offer.
Once you have an offer that’s accepted, we move into the next stage.
Purchase Contract – Initial Disclosures Begin
Once you have an actual purchase contract (this is put together with your real estate agent and the selling side), your loan officer will get a jump on finalizing your initial disclosures. This round of documents is mainly informative – lots of disclosures on what getting a mortgage means for you and the terms of the specific mortgage you’re applying for.
There will probably be some back and forth with your loan officer as they confirm details of your loan application (how you want to take title, amount of money in the bank, etc.). Every mortgage company does things a little differently, so the exact time you are asked to provide personal documents (such as most recent pay stubs, bank statements, ID’s and such) may differ. I like to ask for personal documents a little earlier on – but I will definitely begin requesting those items once I know you are actively searching for a house. At this point, you will probably be asked to finishing sending in those documents or update existing documentation.
I would say frequent communication at this stage can be expected as your initial disclosures are being prepared. Your loan officer will most likely let you know as soon as those are sent your way and you’ll probably have a few questions. Depending on your situation, it may not be unusual for you to be talking to your loan officer several times per day until your loan has been submitted to underwriting.
Once your loan disclosures (specifically the Intent to Proceed form) have been signed, your loan officer is going to move forward with placing your appraisal order. This will require a payment method from you, the borrower. Your loan officer may be able to see updates on the progress of the appraisal itself and the report but they will not have specifics on the appraised value until that report is released. I always encourage my clients to reach out to me after the appraisal has been ordered. At the very least, I can give you updates on whether the appraiser has done their inspection and when the report is expected back. It can’t hurt to ask!
I think the initial underwriting submission is where I see borrowers experience the most anxiety. This is the first time the lender is really going to scrub every personal document – if an underwriter finds something problematic, there is always a chance they won’t approve the mortgage. So it’s totally reasonable to get nervous around this stage. In my experience, most problems can be solved. The underwriters don’t get paid unless the mortgage closes. Even though it may seem like they are giving you a tough time, it is in their best interest of getting you to the closing table. However, they need to abide by all sorts of guidelines and laws so they don’t put their underwriting license at risk.
The other reason I see lots of anxiety around this stage is because the level of contact with your originator changes. In the initial disclosure stage, there is going to be a relatively high level of contact getting your loan underway. Once that loan gets submitted to underwriting, your loan officer isn’t going to have any major updates for you. The underwriter is a separate entity from your loan officer so we are basically in the dark while underwriting works through your file. This is what I like to call the “hurry up and wait” stage.
The amount of time your loan is in underwriting will vary greatly depending on the lender, the loan program and your specific situation. In general, I see underwriting turn times from 2 business days on the low end up to 5 business days on the high end. Throughout this time, your loan officer really isn’t going to get any big “hints” on what underwriting thinks of your file. The only times I hear from underwriting during this period, is if something major is missing and the underwriter needs additional documentation to continue. So don’t be surprised if you go several days or even a week without a big update!
Your loan officer should be able to provide you with an estimation on how long your file is expected to be in underwriting – that way you at least have a target for when you can expect to hear something substantial.
Once your loan is released from underwriting, you should be getting a conditional approval letter (or commitment letter as some lenders call it). This letter basically says that the lender will give you your requested mortgage IF you provide them with x, y and z. Most of the time, a big chuck of the items listed are pretty generic and some are not even the responsibility of the borrower. There will be a handful of items related to title work and documentation the attorney will be working on. You might be asked to update items (maybe the underwriter needs another pay stub or your most recent bank statement). There could also be some clarification requests – such as sourcing large deposits that were in your account, providing a clearer copy of your license if it scanned in blurry, etc.
The amount of contact you have with your loan officer will depend on how many conditions they need from you and whether or not you can provide them with everything requested in one shot, or you piece mail the documents in. Because this is another area that is requiring the review of an underwriter, don’t expect your loan officer to be able to tell you right away if what you provided will satisfy underwriting’s initial request. Underwriters tend to review conditions in just a day or two (this will differ depending on the specifics of your situation and the lender’s systems). If it’s something straight forward, your loan officer can usually tell you if the document will work or not. But if you’re trying to document your private mortgage payment history using a mixture of cash receipts, bartering agreements and checks written out with an incorrect dollar amount, an underwriter will really have to review to tell you if that documentation will work. (I know that seems oddly specific – I went through this exact situation with a borrower not too long ago!).
After all of your conditions have been met and the lender issues the final approval, you are going to be scheduling closing! At this time you will also be acknowledging and signing some closing disclosures. You might have some questions related to those documents but your final documents are usually signed at the actual closing table after the attorney has reviewed everything.
Generally, you actually won’t have a ton of contact with your loan officer during this period. The actual closing is handled mainly by the attorney and scheduled between you and the selling side. But that doesn’t mean you can’t ask your loan officer questions during this period! If there is anything you are questioning or need clarification on, your loan officer can always help guide you in the right direction.
There’s definitely no absolute right answer to “How often should I talk to my mortgage broker?” The biggest thing is to make sure you feel like your questions are getting answered and that you understand what stage your loan is in at any given time. If you are having trouble getting ahold of your loan officer in the prequalification stage, you may want to start shopping around. Prequalification is the easy part – so make sure you are getting your needs met early on! It’s probably not realistic to ask for your loan officer to touch base with you every single day, several times per day while you are trying to close on a house. In general, I think every 2 – 3 days is very reasonable for touching base if you haven’t heard anything specific and you are under contract with a home.
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