April Mortgage Update - One Simple question to avoid disaster
With the mortgage industry looking to automate more, here's a simple question I'd ask my clients when they say or show me they have been pre-approved:
"Did you speak to a broker or bank, or were you just approved online?"
While an online pre-approval is great for an estimate, it's a recipe for disaster if that's all the client has done as it requires self reporting. Here's where things can go drastically wrong:
1) Your clients don't know what they actually make (or what a lender will accept).
Anecdotally, I'd guess 90% of my applications require me to manually change the income number after reviewing documentation. This is no exaggeration.
Lots of times this number changes simply because clients don't know how lenders view their income. For example, 2 year averages for self employment, bonuses, contract income, etc...
Lots of times people simply don't know what they make either! I've had salaried employees off by 10k...
$1000 = $4000 in mortgage (approx), so being inaccurate with income can lead to a disaster.
2) Clients always understate their debt.
I have actually stopped asking clients about their debts on the application as it's always inaccurate. I'll take it right from their bureau when I check credit.
People forget about credit cards they might have, etc...
I've had clients assume a leased car is not a debt. Assume a student loan does not count. Believe their car payment is actually an asset. Etc...
Not only can these debts affect the amount that's approved negatively, an experienced Agent can stickhandle which debts if paid off would maximize their affordability.
Credits and thank you to Jim Steffler for this information. If you’re looking for a great mortgage agent, consider reaching out to Jim!
Jim Steffler
Mortgage Agent Level 2
Dominion Lending Centres National Ltd.
TEL: 226-338-5136
EMAIL: jim@jimstefflermortgages.com
https://jimstefflermortgages.com