In Nevada, most clients finance their home purchase.  Realtors and Mortgage Lenders should educate their clients from the outset about the mortgage process to avoid delays or even denials.  Here are some tips to avoid common issues that affect mortgages. 

1.Don’t forget the year

  • Realize it is 2018, not 2006.  Programs, laws, protocols, and products are different.  If you haven’t financed a home in the past few years, you will notice significant differences.  There are more forms, regulation, processes, and time restrictions built into the mortgage process.  With that in mind, asking questions or checking status is still important.  Client engagement definitely helps move the process along. 
  • There are no “stated income” products in Nevada.  Under Nevada law, lenders must use a “commercially reasonable method of verifying the client’s ability to repay.”  Just because you have good credit doesn’t mean a lender can give you a loan.  They will need your income documentation, whether full documentation, assets depletion documentation, and or bank statement income documentation.  
  • It takes a complete application and then some to complete a mortgage.  Don’t leave out information, this only causes concern, and issues down the road.  Everything is verified now, and clients must source deposits, income, etc. 

2. Don’t Haggle

Negotiating is a thing of the past.  Clients can’t “grind” the lender for a better rate

  • HMDA Reporting ensures that all applicants of a certain credit profile and loan product receive a rate/fee structure that is the same as all others.  
  • You can shop around to other lenders, but you cannot negotiate for a lower than the quoted rate with the same lender.

Restructuring your rate/fee combo is allowed

  • So, if you want a lower rate, you can pay more points or choose a different product (15 years has lower rates than 30 years, etc.)
  • Reducing your payment by eliminating Mortgage Insurance by putting money down or choosing “built-in” mortgage insurance is another good strategy.

3. Don’t stop the train

  • Mortgage Applications are like trains.  Once they get going, they move along.  If they stop, it takes a while to get them going again.  Don’t delay in providing information, signing disclosure forms, etc.  New laws require banks to operate with within legal requirements.  If you miss one signature or form, you are delaying the next step or the next.  Remember, every time a loan closes in 30 days, everyone, including the client, did everything immediately.  An uncooperative client can make a loan last 60 days or longer. 
  • If your lender requests something that is difficult to obtain, the process should be started to obtain it whilst requesting that the requirement be waived.  If you wait to begin the process of getting the item until your request is answered, then your timeline for closing will be extended.

4. Don’t shoot yourself in the foot. 

  • Clients should never obtain any other credit (like a new car, appliances, or credit account) during a mortgage application.  Nor should they quit their job or any number of other detrimental actions.  Before any financial decisions are made, the Loan Officer should be consulted. 
  • Don’t Close your Accounts.  While paying off credit cards is great for your credit score, closing them can drop your score.  This is because the credit lines that are older with low balance to limit ratios are good for your credit.  Closing a paid off account eliminates a “good trade line.”

Lastly, remember there are many types of lenders, but few types of products.  If you are shopping around and you go to 3 lenders who all offer FHA, VA, and Conventional loans, you will receive the same products offerings with variances in rate, fees, and service.  Remember to check portfolio lenders for alternative product offerings with different qualifications, terms, conditions, rates, & fees.