I recently had the pleasure…or pain…of going through the underwriting process to obtain a mortgage. If you have ever done this, you may have had a pain-free or a pain-full experience. Decades ago, the mortgage process was as easy as signing one piece of paper and then getting approved. Maybe it wasn’t that easy, but it was harder to not qualify than it was to qualify. Then the crisis hit and things went the other direction. The qualification process became extremely difficult and many people that had never had issues before found themselves not able to obtain mortgages. While both ends of the spectrum may have been too extreme, let me share how things currently are based on my own experience.
I will say that I believe the entire process has moved closer to the middle of the two extremes. On a scale of 1 to 10, with one being too easy to obtain a loan and ten being too hard, I would say things are around 6. This means that if you have good credit and can afford the loan for which you are applying you should be able to obtain an approval.
But it may require a lot of time and energy.
Here is how my loan process worked. I went to a local company that I already had a personal relationship with. I was told at the initial interview that things looked very good and that I didn’t even need to disclose most of my assets if I didn’t want to because the “equations” and “numbers” looked good. I was beginning to think we were back to the good old days. I had to sign some form and submit a couple of documents like investment statements and a couple of tax returns. Nothing was very difficult to this point.
The mortgage company packaged it up and sent to the underwriters. Now let me tell you how genius this part is. Notice that I now view my mortgage company and the underwriters as separate entities. This is by design…their design. In all reality, in this case they are all the same company. However, my contact at the mortgage company was very deliberate to call “them” the “underwriters”. She separated herself from these bad guys that continued to make “us” do hard work. Any time I was asked to pull together hundreds of documents it was always the “underwriter’s” fault.
Now, on with the story. Once the underwriters received my basic documents I thought I was home free. There were several weeks during which not much happened on my end. No big requests. No urgent phone calls. My option period on the house was winding down, my inspections were turning up nothing, and I was on my way to owning a home.
I was only a handful of days away from closing when things changed. It was like all of a sudden the underwriters woke up and starting reading my original package. Boy did they have questions! I was told they approved the loan but then I was blown away with requests for supporting documents. I was asked to give them more years of tax returns, more years of tax statements, new copies of bank statements, explanations on things, handwritten notes describing business relationships, documents from transactions that happened years ago, and the list goes on.
There were two things that made this really painful: one was the sheer volume of things that I had to get my hands on, the second was that I only had about 24 hours to do so. Someone else’s late request of me had become an emergency. I don’t like to operate in emergency mode but I had no choice.
In the end, the loan went through but we had to have multiple people jumping through hoops that were lit on fire to make it happen. The qualification process and underwriting were fair but very thorough. Like I said, if your financials can support the loan then you should be able to gain approval. However, go into any new mortgage process knowing that you will be asked to work and it may not be on your time table.