Top 5 Tips for Realtors on Mortgage Lending
Unless your customers are cash buyers, the home mortgage loan plays an integral role in most real estate transactions. The relationship between buyers, lenders, and realtors is important to a successful, prompt closing. And a complementary relationship between the Realtor and mortgage loan officer is essential.
Many factors play into a successful closing and ensuring everyone understands what to expect from the process is key. Here are five tips to help realtors and buyers along the way.
- Pre-Qualification vs. Pre-Approval
The terms pre-qualification and pre-approval are sometimes used interchangeably. However, there are key differences. To pre-qualify, buyers will submit initial information for a preliminary assessment of their financial picture with an estimate of the amount they may qualify for. A pre-approval requires approval of the loan, including income, assets, and credit by an underwriter. Whether a buyer has a pre-qualification or pre-approval letter, it helps to know which process has been completed. This is where a good relationship with a mortgage loan officer is important.
- True Costs of a Quick Closing
Depending on the market, the home loan closing process typically takes 30-45 days. A condensed timeline can often mean more stress for the buyer — and the lender for that matter — as well as the potential for added costs and risks. It can be stressful for a borrower to make difficult decisions without adequate time to process relevant information. Rush appraisals are more expensive and if an appraisal is ordered prior to inspection, the buyer will still have to pay for the appraisal even if they decide not to move forward with a purchase due to issues identified during the inspection.
- Every Change Matters
From the time an initial application is submitted through closing, every change matters. It’s important for both the lender and escrow officer to receive copies of any addendums to the sales contract promptly. The fully executed purchase agreement, as well as any addendums, must be reviewed and accepted by an underwriter before final approval is issued. It’s in each party’s best interest to close on time. Having all the documentation ready during the initial stages of the loan process helps maintain the closing schedule and avoid delays.
- How Appraisers and Appraisal Management Companies (AMC) Impact Home Loans
The appraiser is a state-licensed individual and has two primary roles in the home valuation process:
- Verification that the dwelling meets health, safety, and structural requirements; and
- Determination of ‘fair market value’ is used to determine the potential loan amount. Fair market value is commonly established on the price paid for the most similar, proximate, and recent comparable properties.
The Appraisal Management Company (AMC) serves as a liaison between the credit union and the appraiser. The AMC is tasked with appraiser selection (based on specific property type and location), appraiser payment, report quality control, and is a conduit for all aspects of communication between lender and appraiser. Maps Credit Union relies on a local AMC which offers many advantages over national AMCs, that may be unfamiliar with nuances of the Willamette Valley market area.
- Open Communication
Everyone has heard the term “bankers’ hours” and often assumes credit union mortgage loan officers are only available Monday through Friday from 8 a.m. to 5 p.m. This may not be the case for all loan officers. Find out how local loan officers prefer to be contacted for the quickest response (call/text/email) and ask how to handle pressing needs if the loan officer is not available. Taking advantage of technology can also improve communication and enhance the borrower/lender process. Borrowers, realtors, and loan officers can now meet electronically if an in-person meeting isn’t convenient. Look for new features in mortgage software that will integrate additional lines of communication.
Working together with realtors and mortgage loan officers can help today’s homebuyers successfully navigate the home mortgage process.
Sharon L. Whittemore (NMLS #776181) is a Mortgage Loan Officer with Maps Credit Union (Equal Housing Opportunity). She can be reached at (503) 779-1837 or swhittemore@mapscu.com.