A mortgage broker will help compile your mortgage application paperwork so that:
The whole idea is to present a thorough, well-organized package to expedite a sound credit underwriting decision for your benefit.
A good broker should make it so easy for the underwriter, that practically all of their work will be completed for them in advance – which they will very much appreciate. This includes identifying any and all risks, and the corresponding mitigants that will, ideally, allow the underwriter to quickly approve your loan request.
An incomplete, disheveled submission not only reflects poorly on the broker (who should be keenly focused on their reputation), but it will underscore the fact that you are just not ready to obtain a mortgage.
The absolute worst thing is to omit critical information from the submission. Sometimes a borrower will not disclose certain assets they own – thinking that the additional equity or liquidity are not required.
“My reported net worth is sufficient without having to disclose my other rental properties”
Lenders run ownership reports designed to uncover everything. If you sign a loan application that is obviously missing material assets, it will be an uphill battle once the error is discovered. Inadvertent omission is one thing, but intentional omission is likely to be perceived as fraud by the lender.
Let’s say you buy a residential investment property for $150,000 using cash. You fully expect to get a renter, but first need to make some improvements to the property. So, being as smart as you are, you postpone financing the property because you should undoubtedly be able to get higher loan proceeds after you enhance value to $200,000 – right? Most lenders will not advance more than 75% of the original purchase price for the “Cash-Out Refinancing” of investment properties – until at least 12 months after the purchase. This means that you cannot get a loan based on value during that time frame, unless you obtain the loan from a “portfolio” lender (a lender who can maintain the loan on their own books without either selling it to FNMA or having it guaranteed by FHA). Nothing wrong with getting a portfolio loan, but they are oftentimes more expensive.
The government enforced this idea in order to prevent the flipping of homes. Before the housing crisis, investors were bidding up the price of homes via quick cash closings, only to turn around and either quickly selling for a higher price or financing virtually 100% of the price right after closing (there were several lending programs that made it easy for them to do so). Thus, the government wanted to prevent NON-owner occupant borrowers from continuing the same flipping practices – mainly in order to avoid purchasing or guaranteeing a loan secured by properties with inflated values.
I was recently awarded the Lending Integrity Seal of Approval from the National Association of Mortgage Brokers. This means that I have met the Association’s high standards for ethics, integrity, professionalism and knowledge in the mortgage industry. I couldn’t buy it or receive it just by joining the Association; I had to earn it, and my pledge to you is that I will keep earning it every day.
As a mortgage broker, my job is to present you with a range of loan products so that you can select the one that’s right for you. The success of my business rests upon a foundation of professionalism and service.
To earn the right to display the seal, I had to pass a national criminal background check; to keep it I must attend professional education classes, including ethics training, and adhere to NAMB’s strict Code of Ethics, and best business practices. This sets the highest national standard in the country, and I am proud to have earned it.
I’m very pleased to share this important news with you. I look forward to working with you again when you need to finance or refinance your real estate.