When it comes to buying a home, obtaining a mortgage is a crucial step in the process. However, shopping around for a mortgage can be complex and time-consuming, and there are sveral aspects of the process that can be frustrating for applicants.
In this article, we’ll explore some of the most annoying aspects of shopping for a mortgage and how they can be addressed.
1. Lack of Transparency
The biggest headache is the lack of transparency around fees and interest rates.
Most lenders do not provide clear information about the costs and fees associated with a mortgage loan on their website, requiring you to call into their company to get a quote.
That’s where the frustration often sets-in, lenders use jargon and different terms to make it seem like they’re offering a better deal than competitors.
Case in point, in this Reddit post, a borrower was paying a $5,355 Loan Origination Fee but because it was not labeled as “Points” they figured they were getting a “no points” deal.
To address the lack of transparency, borrowers should become educated on the Loan Estimate and what is considered a lender origination cost, and what is considered a 3rd party cost.
That will help them sift through the jargon and better evaluate lenders.
2. Paperwork Overload
One of the most common compliants from borroewrs who have applied for a mortgage is the amount of paperwork and documentation that is required.
This can feel like a time-consuming, out-dated, and tedious process and applicants may feel frustrated by the amount of paperwork they need to provide.
To address this issue, borrowers can take steps to prepare their financial documents in advance.
Qualifying for a mortgage is actually pretty straight-forward. It comes down to three things: Credit, Income, Assets. C.I.A.
- Credit: the mortgage lender runs your credit. The better your payment history, the higher your score.
- Income: 30 days worth of paystubs and last two years W2s. If your self-employed, this can be a little more complicated.
- Assets: Last two months bank statements
In additional, qualification is Collateral. That’s the home itself.
Of course, there can be complexities. Like if assets are coming as a gift, or you’re withdrawing from your 401K, or you’re starting a new job.
An old mortgage proverb: The loan process is standardized but every loan is a snowflake, there’s always something different.
3. Uncertainty and Delays
The process of applying for the mortgage may require multiple rounds of review and approval, which can be stressful and uncertain for applicants. Even after submitting all the required paperwork and information, lenders may still require additional documentation, which can further delay the approval process.
To address this issue, borrowers can take steps to stay organized and communicate regularly with their lenders. It’s important to follow-up with their loan officer and provide any requested information as quickly as possible.
In conclusion, shopping for a mortgage can be a frustrating experience, but there are steps borrowers can take to make the process more manageable.
“SELFi started with a simple idea: to offer the absolute lowest interest rates. That's it.”
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