Home Loan Approval Like Baking A Cake

Phoenix Mortgage Pre-Approval

Every Arizona home buyer that goes through the mortgage process faces a process not dissimilar to baking a cake.  What in the world do I mean you may be thinking?  Let’s look at how the home loan Pre- Qualification process works.  A buyer’s mortgage company and loan officer are tasked with not only finding the right loan product for the buyer but also for requesting all of the documentation required for full loan approval and submitting the file to an underwriter for final/complete loan approval.  While that may sound simple, today’s mortgage professionals have become independent investigators that need to go into more depth and detail when prepping a loan file than ever before thanks to ever evolving mortgage regulations.

Industry guidelines have tightened to the point that any little bit of neglect by a Phoenix area loan officer on even the most seemingly insignificant aspect of a borrower’s mortgage file can cause at best a delay in closing and at worst loan denial.   Buyer’s, who are often unaware of the seriousness and scope of mortgage underwriting these days can become frustrated by the documentation demands and info probing they get to experience during the mortgage process.  Client’s often feel loan officers stop one half step short of a DNA sample – which in some cases is not far from the truth!

With me so far?  Wondering how all of this is in any way similar to baking?  Let’s get metaphorical.  For a moment imagine that your loan officer’s job is that of chef and he is required to bake a perfect cake or in other words make sure your loan file is spotless and get’s underwriting approval.  As your chef, the loan officer must gather all the proper ingredients so that the batter turns into the perfect cake.  Now imagine the food critic tasting the cake at the end of the batter’s time in the oven and saying whether or not the cake is acceptable or not is the underwriter in our story.

2 Way to Bake a Cake – Submit a Loan Package

A loan officer and a buyer have two choices when submitting the cake batter (loan application) for final approval.  1. Put a half ready/incomplete batter in the oven or 2. Put a complete, thorough and accurate batter in the oven.  Each leads to a completely different experience and outcome:

Option #1 – The Incomplete Batter

At the end of the food critic’s (aka underwriter’s) review of batter #1 they will come back to the chef (loan officer) and require they go back to their client to request more ingredients (aka more documentation and information).   Once they obtain the additional ingredients the chef (loan officer) will then need to put the cake batter back in the oven and await the food critic’s (the underwriter’s) second review.  This cycle repeats itself until the batter’s ingredients are complete and the cake is right.   During this process a few bad things happen:

1. Valuable time is lost and a late closing is more likely
2. Client’s patience dwindles and their frustration level rises

Option #2 – The Complete Batter

The chef (loan officer) can opt to request a more thorough list of ingredients on the front end before putting the batter in the oven.  The batter that is complete and full of all the right ingredients (documentation etc…) comes out and passes the food critic’s (underwriter’s) taste test after the first submission to the oven.  The complete batter approach saves repeated submissions back and forth into the oven and to the food critic (underwriter).  This is a much better way to make a cake and a much more efficient way to manage a mortgage application and Pre-Approval!

Moral of the story – make a great cake and submit a good batter the first time!

Now in today’s mortgage environment even the best loan officers receive conditions on the most through of loan files.  Underwriters are in the business of playing devil’s advocate to make sure that loan applicants meet each and every mortgage guideline.  However, being thorough on the front end is extremely beneficial to every buyer and allows loan officers to close their mortgage on time without delays.

Please let me know if I can help you bake your cake!

Jeremy

 

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