The Mortgage Colonoscopy
Okay, maybe the analogy is extreme… But, thanks to the cumbersome mortgage regulations, it will be a long time before borrowers exclaim: “Boy was it ever easy to get that mortgage!”
It is always advisable to expect the process to be highly invasive in respect to your personal financial records. And, it is a time-consuming exercise, fraught with an abundance of disclosure and closing documents. But believe it or not, the process has actually improved over the years.
For the time being, the negatives are essentially fixed. But at least the most active, progressive lenders have been able to offset some of the frustrations by simplifying the process and offering more cost saving solutions. For example:
- Instant Funding: The wire can now be released to the borrower as soon as the last document is signed (it used to be that the lender needed to review all of the signed documents, and then provide an authorization number for funding – which could take hours);
- Appraisal Waivers/Refunds: At or below an 80% loan-to-value ratio, the appraisal could possibly be waived – depending on overall borrower financial profile. Or, depending on the mortgage product, some lenders will refund the appraisal cost up to $500;
- PMI Discounts: Economies of scale from larger lenders has lead to attractive discounts to monthly private mortgage insurance (PMI) premiums;
- No Overlays: Many lenders have traditionally added their own conservative requirements to the minimum lending conditions imposed by Fannie Mae/Freddie Mac. Today, industry competition has rendered these “add-ons” as unnecessary.
Here’s the Point: Getting a mortgage will never be a “walk in the park”, but at least some lenders are making the process a little more tolerable and efficient.