As an independent mortgage professional, you’re the go-to resource for your clients when it comes to financing their home, whether it’s before, during or after the term of the loan itself. Obtaining a mortgage is an extremely complex and sometimes daunting process for your clients, and they’re going to lean on you heavily to ensure they’re making the best decisions for their financial situation.
Let’s take a look at some of the most common questions you’ll likely be asked throughout your career as a mortgage broker or loan officer.
1. How do I get pre-qualified for a mortgage? Getting pre-qualified is a relatively simple process. But before you dive into the details with your client, make sure they understand the difference between getting pre-qualified and getting pre-approved.
A pre-qualification is essentially a rough estimate of how much your client will be able to borrow for a home loan based on their overarching financial situation. They will need to provide basic income information, agree to a credit check, and give general information about their bank accounts and indicate roughly what their down payment will be, as well as their desired monthly mortgage payment.
A pre-approval, on the other hand, happens after your client completes a mortgage application. To obtain pre-approval, they’ll need to provide you with copies of pay stubs, give permission to run another credit check and supply bank account numbers, desired down payment and mortgage payment, and W-2 statements, Once everything is verified and approved, you’ll give your borrower a pre-approval letter, which is what they will submit as part of a bid on a house.
2. Is there anything I shouldn’t do while I’m looking to purchase a home? You should address this important topic with your client, whether they ask about it or not.
Let your client know that, even if they’re pre-approved, the lender will still be required to pull a credit report right before closing to ensure they haven’t acquired any new debt of had any other changes to their financial situation. This means they shouldn’t do things such as:
Suddenly pay off all debt, which can negatively impact their credit score
Apply for a new credit card
Make a large purchase (jewelry, car, furniture, etc.)
3. How much do I need to put down?Many borrowers automatically assume they have to put 20% down, but more often than not, this isn’t always the case. In fact, some people can pay as little as 3% up front, depending on what loans are available for them based on their qualifications. However, there are pros and cons to either decision, so make sure you sit down with your client and discuss their options.
4. What is mortgage insurance, and do I need it?Mortgage insurance protects a lender if a borrower defaults on their mortgage payments. This is typically required if your client puts less than 20% down. Your client will then pay mortgage insurance every month until they have more than 20% equity in their home.
5. How much should I set aside for closing costs? Closing costs account for things such as attorney fees, pre-paid interest, documentation fees, etc. These costs typically range from 2-5% of the purchase price. Let your client know that these costs differ from person to person, and spend some time determining what their situation will look like so they know what to expect.
Your client will be able to see their closing costs broken down in their closing disclosure, which you’ll provide to them about 3 days prior to the closing date.
These may seem like simple, straightforward concepts. However, it’s important to remember that while you’re ingrained in the industry every single day, your clients likely aren’t. Be patient and empathetic with them during this time. It’ll pay off in the long run.
Are you ready to take the first step to become an independent mortgage broker so you can start answering important questions like these for your borrowers? Our team at BeAMortgageBroker.com is here to help you every step of the way.
