It's Been a Few Years Since I've Purchased or Refinanced a Home, What's New in the Mortgage Process?

By, Mike Carney, Sr. Mortgage Banker

For anyone that hasn’t purchased a home or refinanced their current home recently, several changes have been implemented to the mortgage process that you should know.

Significant increase in government regulations. Depending on how long it’s been since you last applied for a mortgage, there are significantly more government regulations.  Many of the changes are a result of the Dodd-Frank Act. These new regulations are aimed at preventing a lot of the reckless lender behavior that created the housing bubble that occurred a few years ago.

Significant increase in documentation needed. If you are considering applying for a mortgage soon, start planning now.  You are going to be required to furnish your lender with full documentation.  That includes, but not limited to, tax returns, W2’s, paystubs, bank statements, proof of current housing expense, etc.  Remember that your loan can only be processed as quickly as you furnish your lender with the documentation they request.  And contrary to popular belief, lenders don’t arbitrarily request documentation; there’s a reason why you are being asked to supply items.

Longer processing times. All of the changes we’ve implemented have resulted in longer processing times and consequently, longer closing times.  While 30-day settlements were commonplace in years past, today it’s more likely to see 45 or even 60-day settlements.  While some situations that delay settlements are unavoidable, many can be avoided simply by planning ahead and being prepared.

If you’d like more information about Apex’s current mortgage process contact me or download our 7 Steps to Settlement flowchart. We’re committed to closing clean and on time, every time which is why we believe communication is key. We keep our clients informed each step of the way, and like to be upfront about our steps to settlement and what you can expect from the process.

What Do Underwriters Actually Do Anyway?

By: Scott Shenton, Mortgage Banker

For anyone who’s been through the mortgage process, particularly in the current regulation-heavy environment, they may feel that underwriter’s only purpose is to be difficult. Although it may feel that way sometimes, underwriters actually are the superheroes of the mortgage industry. 

To appreciate why underwriters are so indispensable, it’s important to first understand a few of the underlying processes in the mortgage industry. No matter which institution you choose to do your mortgage, it’s a near certainty that that loan will one day be sold to a different institution. This buying and selling of mortgages is collectively referred to as the “secondary market”. It’s this buying and selling of mortgages, that enables institutions to continue to have funds to lend and without this market, the entire system would come to a screeching halt. For a mortgage to be considered viable on the secondary market, it must be structured and delivered in a way that proves that it is indeed a good investment (adequately low risk) and is consistent with industry standards.

  

This brings us back to the heroes of this story, the underwriters. Loans are delivered to underwriters complete with a large collection of supporting documents intended to prove a borrower’s income, ability to repay the loan, credit worthiness and the circumstances in which they are purchasing the property. An underwriter’s job is to then look at the big picture and ask the difficult questions.  Is the borrower’s income consistent and stable? Are the borrowers using the property as a primary residence, 2^nd home, or investment? Are all debts being taken in to consideration when determining a borrower’s ability to repay the loan? Does the loan make sense, and will it be purchased by an investor?

Underwriters are expected to pose questions that may impact the loan’s marketability and request additional documentation to answer these questions. When an underwriter has done their job well, the loan will easily be sold and will continue on, issue free. It’s this step that keeps the secondary market, and ultimately the mortgage industry plugging along.

So take it easy when answering an underwriter’s request for additional information and thank them. They keep homebuying possible. Want additional information about the homebuying process? Request a copy of our homebuyer’s guide or apply online.