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Mortgage Minute with Matt “Pre-approval Process”

This is a new series we’re doing where we’re talking about mortgages, different mortgages, different terms of mortgages, pretty much everything in between.

All right, so on our first video series, I think it’s best to start with pre-approval process. What do you need? How does that work?

Pre-approval process, we make it, with my transition over to Fairway, where technology is kind of at the forefront in our world right now. The easiest process to get started is to jump onto my website. We have a mobile app now that customers can go right onto our mobile app, complete an application right there. It probably takes them five to 10 minutes to complete. That’s the first step in getting the pre-approval process going.

All right, so what’s all involved? What should they have prepared to start the application?

If they could have their income documentation prepared, pay stubs, W2s, if tax returns are needed, that I have seen in my experien ce can be the ultimate deal killer, if somebody states an income on an application but when we go to verify it down the road it’s not the same, that can really derail a loan.

Right, so we want to be accurate with our information we’re providing.

We want to be super accurate with income, and that’s my job to not just issue a pre-approval letter based on what’s on the application. It’s to pick up the phone, call your customer, confirm their income and make sure that they are in fact approved at the amount that’s on there.

So on the application that they sign online or they put together online, do they have to upload that documentation right away or is it something that they can do just the online first?

Yeah, good question. So no, they don’t have to upload anything via, or immediately in order to get the pre-approval process going. Literally it’s all just done electronically or if we need to do it over the phone with them they can. Another cool thing though that our mobile app does include is if they needed to send pay stubs or W2s, our mobile app has a scan feature on it to where they can take a picture of the document, scan it directly to the file I’ve created for them and so they don’t have to, they don’t need a computer or a fax machine to get that stuff to me anymore.

Great. That’s super easy. What about the purchase price? I’ve had this conversation with several clients. They want to buy a house, I ask them what’s your pre-approval amount? Oh, I haven’t started that process yet. Okay, great, well what do you think you want? And I’ve heard I don’t know. I don’t know what I should do.

The very first question I ask a buyer when they’re looking to buy a house is where would you like to keep your payments? What payment range would you like to keep them in? How much money do you have for a down payment? Knowing those two things are going to tell me what price range of homes they need to start looking in so when you start driving around looking at houses you’re not looking in the wrong price range for them.

So once you have, once they’ve completed the application, they’ve submitted everything to you that you’ve asked for, what happens then? How long until they get that letter in hand?

I try to go through an application within 24 hours after receiving it. So sometimes it takes a little longer depending on the complexity of a file, the amount of tax returns we need to possibly look at on a self employed borrower, but generally you’re getting a pre-approval letter within 24 hours. If not sooner.

What’s on the pre-approval letter?

We’ll put the type of loan that your customer’s approved for, the term of loan that they’re approved for, whether or not their approval is contingent upon them selling a house, non contingent upon them, not having to sell a house. The stuff that you guys are looking for in order to submit an accurate offer to a seller, we’re putting on the pre-approval letter.

How long is that pre-approval good for?

120 days. When 121 days comes up that doesn’t mean you’re starting over. All it means is that the credit report expires and that we’ll just re-pull credit if they’re still in the market to look for houses.

Is there anything that borrowers should do for, to make sure they’re getting the best process started with you?

Yes. Great question. So at Fairway we have a pre-approval process, which is the amount of underwriting support that we have at Fairway, we have a department that literally is designed to underwrite loans or underwrite files before a house, before they have a house under contract. So I am asking for customers, especially in a competitive market like you have here in Kansas City when houses are flying off the market, you want to make sure your buyer’s offer is as strong as it can possibly be out there if they’re getting financing. So what we have at Fairway is, and it’s all up to the borrower to send us the documentation that we would need like pay stubs and the bank statements and stuff like that.

But we can literally get somebody’s file underwritten, have credit, income and assets reviewed and approved and I can then issue you a loan commitment letter pending appraisal, title work and insurance on a property. So when I issue you that loan commitment letter, it is as good as a cash offer when you’re going to submit an offer to a seller.

I’m pushing that on every file that I get. It takes all the leg work from a borrower so that when they submit that all to me up front, when they go find a house and they’re under contract on a house, the hard part’s already done. They’ve already done all the leg work so it really streamlines the process from the time they’re under contract. It keeps their life super streamlined, super simple. They’re not having to worry about chasing pay stubs and bank statements and verifying a deposit. All that stuff has been done, assuming it’s within the 120 days that we have.

Awesome. So correct me if I’m wrong but if they have submitted all this stuff, you’ve already gone through the underwriting process and now we have a loan commitment, we can actually close sooner than the 30 to 45 days.

A whole lot sooner. So we can close as quickly as we get the appraisal, title work and homeowner’s insurance back. It could be as quickly as seven days. By law we can’t close within seven days but I’ve literally closed one in seven days with this process. So it really sets that buyer’s approval apart. It keeps things very efficient on our end, on your end and it makes everybody happy.

Is there any other tips you have?

Really credit wise, making sure you’re continuing to obviously keep your credit in the best shape possible. Always feel free to contact me to be a resource for that, to help you clean up credit. That’s one thing I do, if I can’t get somebody approved I’ve got 14 years of experience in diving into credit reports and letting people know what they can do to start working on things to get it repaired. So really, that’s about it.

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