The mortgage loan approval process has changed in the past 30 years, and those in the lending business know it all too well. After the subprime mortgage crisis of the late 2000s, additional safeguards were put in place to prevent future issues. And while these process improvements were necessary to protect people, businesses, and the economy, they didn’t come without consequences.
One such condition is the loan approval timeline. Previously, fewer steps were involved, less paperwork, and more flexible turnaround times. However, human nature still demands quick resolution to life’s desires and even faster resolution to life’s needs like shelter. And as your client’s mortgage lender, you can guide them toward a quick loan closure even through the complexity.
1. Secure Essential Documentation Early
Today’s digital-first society makes a lot of life easier and kitchen countertops less messy. But when a client shops for a mortgage, they may be shocked to find out how much paperwork is required. Suddenly, they’re scrambling to find essential documents, create new logins, and maybe even waiting on PINs to gain access. Fortunately, the paperwork shuffle is a dance that’s optional when a loan officer takes charge of the situation.
First, make it clear what information is needed from potential new clients at your first interaction. Whether you’re providing a checklist on your website, via email, or in-person, a robust list of documentation is a necessity. Walk through this list with your clients and express the importance of their ability to speak to each line item. Outline how and where they are to provide this information so they can upload documents as they get them.
Next, kick off the process of securing documentation that requires confirmation from others. One major potential snag is verification of income. Human resources departments vary in size and processes, making turnaround times a major variable. Avoid delays and verify income and other financial data, like account balances and taxes, early in the process. If there are surprises, you have ample time to address them or adjust your plan instead of halting the loan.
2. Work Ahead of Loan Milestones
Typically, a 30-day loan closure is considered one executed at lightning speed. And while today’s staffing challenges across the mortgage industry make it less likely, an expedient loan closure is possible. Paramount to helping your clients land their deadlines and for you to meet sales targets is managing a tight timeline.
Once you’ve verified your clients’ income, obtain a loan pre-approval they can use in negotiations. The stronger their offer, the more likely it is they’ll reduce exhausting concessions. In more competitive markets, a pre-approval letter can help your clients use a best and final offer strategy. This negotiating tactic tells sellers that buyers are serious about their interest and makes clear their limits. This type of offer puts all the cards on the table, but it can also lead to seller acceptance.
Once you’ve inked a deal, it’s time to get home inspections completed. Your buyer will be able to choose their inspector, but tossing this responsibility their way can lead to delays. Refer your borrowers to reputable inspectors you know to be timeline sensitive, ideally early in the process. Include this and other referrals in your new client packet so they can research the inspector that meets their needs. And when it’s time to schedule, they’ll know who to call right away.
3. Keep Schedules Open
Everyone is busy, but while pursuing a mortgage loan, it’s important for your clients to keep their calendars clear. Early in the process, this may mean committing to checking email, client portals, or being available by phone often. Questions often arise that need to be resolved quickly in order for others involved in the process to move forward. Share insight as to why being readily available and engaged helps your clients’ loan package stay moving.
When it comes time to have the property inspected, your clients will need to be as available as possible. Evening appointments come at a premium, so if your clients can make daytime inspections work, you can get ahead. As with paperwork requirements and other expectations, making this need known early can help them be prepared to adjust schedules.
Home appraisals are often the largest variable in the mortgage loan approval process. Perceived values and competitive markets can drive list prices up, which can quickly be squashed with a low appraisal. While your clients can’t impact the appraisal, they and the selling clients can make gaining access to the property painless. Ensure that everyone is committed to having an appraisal-ready property so appraisers have ample time to do their work. If your buyers are also selling, this expectation applies to them, too, as their sale can impact their new purchase.
Information, Expectations, and Clarity Matter Every Step of the Way
No matter the loan type, customer profile, or geographic area, a clear understanding of the mortgage process goes a long way. And that understanding demands a shared commitment between you and your clients. Develop a set of shared expectations for everything from communication to financial changes. When you manage potential risks, you’ll speed up the loan approval process and get your clients into their new home.
