HOW TO MULTIPLY YOUR CHANCES OF LOAN APPROVAL

    Lending is more of an art form than a science. There are so many variables that enter the picture that determine whether your loan is ultimately approved or declined.  It is usually a combination of hundreds of variables, how the loan was packaged, presented and most importantly, to which lender.

    One of the many questions that occur in the finance industry pertaining to mortgage lending is, "Why use a mortgage broker versus a bank, savings and loan or mortgage company?"   Unlike a bank, savings and loan, or mortgage company, the mortgage broker acts on behalf of his/her client in finding the best possible lending program among his/her available correspondent lenders. 

    Many times a mortgage broker may have numerous relationships with competing lenders, offering various programs to assist the client.

    One very important factor to consider is a mortgage broker receives fees from the lender with whom the loan is finally placed.  This usually saves the client money; but, also, the mortgage broker can find other lower costs relating to the financing transactions.   Once your apply for a mortgage, you will receive what is known as a "Good Faith Estimate of Closing Costs."

    You will also receive a booklet on settlement costs.  The Real Estate Settlement Procedures Act of 1974 (RESPA) is a federal statute that protects borrowers and this book goes into detail of what your closing costs involve.

    As a rule of thumb, in Washington you can calculate between 3% to 7% of the purchase price of the home for closing costs.  The same holds true for refinancing, except you will use the loan amount as your basis to calculate the percentages.  Take into consideration the following fees:

    0-2% Loan origination fee (depending on loan type, loan amount and lending criteria).

    0%-2% Loan discount points (depending on whether or not you decide to pay for a lower rate).

    0%-2% Tax, insurance, mortgage insurance (if needed), interim interest, impounds (this will depend on your down payment and whether or not you decide to have these collected.)

    Other fees will include credit report, appraisal, title insurance, processing, document preparation, etc.

    The above figures can be altered depending on how many or how few points you desire to pay.   Many times you can pay less points and have a slightly higher interest rate to conserve on closing costs.  This subject will be reviewed when you are applying, because there can be many other alternatives to fit your needs and budget.

    Back to the mortgage broker. We are very similar to other brokers in other fields. We earn our fees only when we place the loan, so who do you think will work as hard as they possibly can to get you, the borrower, the proper loan? That's right.  We have a vested interest in every single applicant we take as a client.  The vested interest is one of the the most important aspects of using our services.  If for some reason you are turned down by the first lender, we can immediately re-package your loan and submit it to another lender who can see merit in the loan that the first lender refused.

    Now, as we all know, time is money, so our main goal is to get you approved in the shortest amount of time with the least amount of inconvenience.  We have had an occasional lender not interested in doing the loan because of certain questions such as property value, employment concerns, condition of property or income concerns.

    After re-packaging the loan we found other lenders who found merit in the loan and approved it.   Our business is like every other business, everyday certain aspects due to conditions of economy, marketability, and numerous other factors change the playing field.   Today, for instance, one lender will be difficult on self-employed borrowers, tomorrow they will change the guidelines and create an open arm policy for self-employed borrowers.  Fortunately it's an ever changing business with constantly changing parameters.

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