Re: The mortgage pre-approv
07-21-2010 10:54 AM
The issues typically arise when the loan officer hasn't thoroughly thought through the (score for alliteration) entire loan, and after the underwriter reviews. Items could range from not requesting tax returns which contain a self-employed business loss the loan officer didn't ask of or the borrower accidentally didn't disclose and the loss throws debt ratios out of qualification range, a low-ball estimate on property taxes and/or insurance or not taking into consideration of an HOA fee the home has, not reviewing bank statements to make sure all significant deposits are sourced, and simply just not asking questions when they are unsure of something. A lot of loan officers are afraid to ask questions, and with some lenders it takes a very long time to get accurate answers. A family member of mine made it to supposedly a week before closing when the past employer overseas was unwilling to verify employment, so they only had 1 year 10 months in the US, and were declined. While that is a pretty unique situation, the loan officer, who had been working for this lender for 10+ years, should have just asked underwriting if the previous employer is unable to verify employment will we have an issue, and then had that verification taken care of immediately (or found out they won't verify).
Bank of America is one of bigger lenders that doesn't typically do a lot of pre-underwriting, I suppose it's because of how large of a volume of loans they do just doesn't allow a lot of it. Usually 2 or 3 people can be involved in the pre-underwriting process, and having that many people's hands on a loan that isn't under a contract to buy a home may be cost prohibitive. Not all lenders out there are like that, so it's always good to ask what the pre-approval process entails. Talk about your situation, ask the loan officer if they foresee any issues (even small ones), ask how your loan will be processed. With a good loan officer, which can exist at any lender, including Bank of America, a loan can be properly pre-underwritten... it just takes a little foresight, persistence and determination.
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