By now you’ve all heard of the new “fully-automated lightning-quick” mortgage process. With promises of 10-minute approvals and a fully online application and approval. Does it work? How does it work?
Let’ start with a look at how the process works. The prospective buyer/borrower goes online and starts by answering the first few questions. Do you need a loan to purchase a home? Are you looking to refinance your existing mortgage? Do you want to pull cash out of your home? Dependent upon your answer, you are guided to the next screen.
If you are looking to purchase a home, the next natural questions will be – what is the proposed purchase price, and how much are you looking to borrow? If you’ve got these answers, then it’s going to ask you how much you make and how long you’ve been working at your job. Then the program is going to require you to “link” your financial accounts to their program. (Scary!) Once you’ve given them permission, they now have instant access to your bank accounts. You will also need to provide accurate information, in order to properly pull your credit report, like Social Security numbers, dates of birth, living addresses for the last two years, dates of employment, etc.
Now let’s take a look at the ‘reality’ of how the home buying experience works in Las Vegas. You, the Realtor, are contacted by a prospective buyer, who tells you they are interested in buying a home. You ask them a few questions in regard to location, home price and desired amenities, and then you refer them to your Mortgage Loan officer partner to do a pre-qual. The Loan Officer makes contact with your prospects and obtains the necessary information to determine if they can qualify for the home price they are considering. Your buyer’s financial info is not out “on the Cloud”, no one has “instant access” to their bank account, and the Loan Officer can give you a range of home prices they can shop for.
I am all about technology! It has changed the world as we know it. But when it comes to getting people qualified for the biggest purchase of their lives, I believe an ‘intermediary’ is critical – especially in our town! While your buyer’s qualifying info will still be put into a computer and their approval will still be automated, the information that the computer bases its decision on has been “edited” by the Loan Officer. By edited, I do not mean falsified. I mean that the Loan Officer will look at “all of your buyer’s information” and compile an application package that the automated underwriting system will like.
To me, the closest analogy here is to someone taking a photograph of you. Can the photographer simply point the camera at you and snap? Or are there adjustments which make that photo (you) look better? The lighting, the shadows, your hair, your stance, the clothes you are wearing, the background, etc. all play a part in the appearance of the photo. In a “vanilla town,” the instant mortgage may work just fine. But in the transient, job-hopping, cash income, credit issues town that we live in, I recommend that you keep doing business the same way we have for years – person to person.