So now that you've decided to buy a home, how can you avoid an unnecessarily long process between submitting your application and getting the keys? Thanks to a host of new requirements now in place, a small inventory of homes, and a tight lending environment, borrowers are already challenged to find the right home and the right mortgage. For perspective, here are just a few of the new rules that have gone into effect in the last couple of years:
• "Ability-to-Repay" - This means that lenders must now do their best to ensure that borrowers have the means to make their payments. That's part of where increased paperwork and documentation comes from.
• "Qualified Mortgage" - This has contributed to some tighter lending requirements, as the "QM" loans have much more standardized and reliable lending features. Great if you're a W-2 employee with perfect credit looking for a standard 30-year fixed rate loan. Tougher if you're self-employed with less-than-stellar credit looking for a jumbo loan. Good luck getting Fannie Mae and Freddie Mac to sign off on one of those loans.
• "Know Before You Owe" - These disclosure-focused rules just went into effect a few weeks ago and added new regulations and timetables on when and how lenders are required to disclose information to borrowers. Loan officers who miss a deadline will find they will suffer unnecessary delays.
Forbes contributor Mark Greene has five helpful tips to make sure you don't sweat the final days of your mortgage process:
1. Full disclosure! As you can see from the above examples, your lender will need to know an awful lot about you before approving your loan, so don't hold anything back. If there are any hidden blemishes, Greene suggests that you "come clean early, plead guilty, and throw yourself on the mercy of the QM court." Certainly better than your loan officer finding out at the last minute.
2. "All-in" with your paperwork. Know ahead of time that you'll be required to provide more documentation and paperwork than you think, so be prepared to get all of your financial information together early. Missing or delayed paperwork is a quick way to put your loan into quicksand.
3. Make a new friend. Greene encourages the borrower to find out who their individual processing agent is and call them up, introduce yourself, and offer to help in any way you can. This is your point person and making friends will likely make a difference.
4. Close the deal with the seller early. Conclude any of the back-and-forth negotiating as soon as possible so there are no last-minute problems.
5. Tie up loose ends fast. Don't wait until the last minute once you find out you're missing a document or need to provide another piece of information. Greene reminds that these final details could be the only thing standing between you and your "homeownership trophy."