FINANCIER$ Mortgage Group
The “Approval Experts”™ since 1984!        
(817) 204-0028     Fort Worth 
(972) 644-8244             Dallas
 

The Crazy Town sign is appropriate due to Congress so I am going to try to make things easy for you.


There are basically 3 things you might want from a Lender at this point in your real estate search. 
Let me show you how to get them.

MARKET UPDATE VIDEO SECTION
(mostly for those in the industry)

  1. -Turndowns

  2. -Central Market

  3. -Who is FINANCIER$?

  4. -Mattress Money

  5. -Disabled Vets

  6. -Rebuilding Credit

  7. -How to Get & Keep High Credit Scores

  8. -Appraisals Done Right!

  9. -Why the fuss about Millennials?


FINANCIER$
Mortgage Group

S.A.F.E. Act compliant


NMLS # 236854, 225460 & 234360


  1. (817)204-0028

(972) 644-8244



718 Boling Ranch Road

Azle*, Texas 76020


(*actually we are nowhere near Azle. We are really on the edge of Fort Worth)

#1 You can be PreQualified.


#2 You can be PreAPPROVED (Yes, #1 & #2 are two completely different things)


#3 Or you can begin the loan process so you can get a lot of the work behind you, know definitively you can get a mortgage, have time to work out any “bugs” in your situation & close more quickly once you find the home you want to buy.



Let me explain the difference between the three & explain why you’ll have to be very specific about what you want and what information you furnish us!



#1 A PreQualification is a good first step & a way to get some kind of idea of what price home you might be able to qualify for, but it is in no way binding and can be quite inaccurate because it’s dependent upon the information you give to the person doing the PQ.  And as you’ll see in a second, in most cases you won’t even know how to accurately answer the question of “What is your income?” and you definitely won’t know other “compensating factors” to offer that can help you be approved for more home.  Pulling your credit solidifies some information but just because your credit was pulled does not make this a PreApproval.



#2 A PreAPPROVAL goes further & gathers all the information needed (think mini-loan application) to tell you exactly what loan amount, downpayment, loan types and to a lesser degree what type of interest rate you will be eligible for. (High, medium, or low)  The reason it can't tell you your exact rate is that your rate cannot be locked until you’ve found a property.  Rates change daily by a small amount plus your loan amount and down payment affect your rate as well as how long you need to lock the rate for - so exactly what are you going to buy, what’s the exact price & address, when are you going to buy it and when will you want to close?   FYI a short lock is less expensive than a long lock period.  


A PreApproval is usually what a good Realtor will require before they’ll even show you homes.



AND BEFORE WE GO ON TO #3 HERE'S A WARNING:  

In 2010 the Super Majority passed a law that makes it extremely difficult for you to get #2 or #3.


The Dodd-Frank Act was passed in 2010 and this part of the law became effective October, 2015.  At that time it became illegal for a Lender to ASK FOR or IMPLY THEY NEED certain income & other detailed information about you until you make the formal loan application.   So let me say that again, a Lender can’t legally ask for or imply they need paystubs, tax returns, W-2s, bank statements & other detailed information which means if you don’t volunteer that information they can’t tell you what you can afford.



Also this law decided that YOUR TAX RETURN IS YOUR INCOME!!  



For mortgage purposes your income is not what your paycheck or boss says, so if you take tax deductions you are reducing your qualifying income and you won’t be able to buy as much home.  Whoopsie!  See why I said you probably wouldn't be able to accurately answer the question of “What is your income?”. 



So tell me how a Lender is going to be able to tell you how much home you can qualify for if they aren’t allowed to ask for the information that would allow you to assuredly shop for a home in the first place?  A classic Catch 22.  Hey, but it’s Congress so we’re all used to this type of “well thought out” type of legislation.



Here’s another good question, how are you supposed to know about
this law and know you need to volunteer the information? 



#3 Making your Loan application prior to finding a property so you could close in 10-20 days used to the norm, but the Super Majority decided that was limiting the amount of shopping around people did for mortgages so they made it extremely difficult for you to apply before you’d bought a house.  Of course that means with only a PQ you probably will have contracted for a house you can't qualify for which would cost you about $1,000 in fees such as option fee, inspection fee and appraisal fees.  Boy Congress certainly was a big help!!  In case you can’t tell, I’m being facetious.



The new administration has changed that rule and has once again allowed you to make loan application before finding a home, saving you money & once again shortening the loan process.   Allowing you to work out issues prior to writing a contract and potentially losing thousands of dollars is a very good thing!



So just to be clear, to get a PreQualification (#1) all you need is the information in your head.  It won’t be precise, but it will get you “in the ballpark” presuming that some of the missing information doesn’t totally change everything.



To get a PreApproval (#2) you will need to VOLUNTEER to the Lender proof of your income by way of paystubs and tax returns/W2s, & bank statements to show your assets plus your credit will need to be pulled.  Remember a Lender is not allowed to ask for or imply they need these things so if you don’t VOLUNTEER THAT INFORMATION all you can get is a PreQualification.



To do a loan application (#3) go to the page on Basics - Mortgage Application and follow the instructions there.  The video really makes things understandable and easy.



Let’s jump back to the PreApproval process for a minute. In response to the Dodd-Frank Act most lenders have limited your contact to a Loan Officer or any other real person until after you’ve filled out an online loan application and volunteered some (probably insufficient) info as a way to limit the Lender’s liability and to be reasonably safe from the CFPB (Consumer Financial Protection Bureau).  But there’s a very real problem with that method which I’ll explain in a moment.



Our answer is to spend the time to not only educate & train our loan officers, but also to educate our customers so they know how get what they need for themselves. 



So what’s the big deal with an online loan application - it’s easy and convenient?!?



Making you fill out an Online loan application before you’re allowed to talk to someone isn’t a very good answer for YOU since almost all fraud originates from online loan applications.



Because of the fraud potential all online loan applicants are scrutinized much more closely than those who make an application the traditional way with a human involved.   Based upon what we’ve seen, with an online loan app you are 60% more likely to be turned down for your loan & if you are approved you are likely to have 4-5 times more conditions. And then there’s the fact you’ll go through a more in-depth & rigorous processing which will have you pulling your hair out & is really what leads to the 60% greater chance you’ll be turned down.



This means if you make an online loan application you already have 2 strikes against you and your odds of getting your loan approved just dropped significantly.  It also means that if you are approved you will have significantly more loan conditions than if you’d made a traditional loan application.  So an online loan application is the last thing you’d prefer to do.



We were one of the earliest adopters of online loan application software because it’s the simplest and easiest way for a Lender to get all the information in a loan application.  But since we’ve seen the turn down figures we’ve scaled it way back, and while there’s a lot you can still do online, we want you to be approved so we do things in the manner that guarantees more loan approvals.  It’s a lot more work for us, but since a loan approval is the desired goal we feel it’s the only way to go.



SO WHY EXACTLY IS AN ONLINE LOAN APP SUCH A PROBLEM?



Every online loan application system takes your initial, & probably incomplete, loan application and runs it through the computerized automated underwriting systems before it sends your data back to the lender - AND THAT’S BAD!



Most lenders aren’t aware of this, but because of all the tomfoolery that many Buyers tried during the recent recession the AUS (Automated Underwriting Systems) were changed to include a “memory” of the initial way your information was entered into the system and any subsequent changes made over the life of processing.



Any change in the data has the potential to cause your file to be flagged for “possible fraud” and require more careful scrutiny of all your data and consequently require much more documentation which will give you a more complicated loan process and a higher chance of a turndown.  



Too many or the wrong changes can also cause your loan to be flagged for Quality Control procedures after approval which can delay your closing.  



But it gets worse because it can also cause you & your loan to be investigated by the FBI after closing.  Nope, an online loan app is not the way you’d like to go!



As representatives of Fannie Mae & Freddie Mac explained the history footprint (as they call it) to us,  they used the seemingly positive example of a loan officer discovering $30,000 in a retirement account that you hadn’t entered or had entered incorrectly.  Being good loan officers we said we would promptly enter or correct the data on the application.  More money seems like a positive, right?  More money means you have a stronger loan application, right?  



WRONG, because now your loan would be automatically flagged for further scrutiny because the system wants to know all about this money that suddenly appeared.  



So how bad is this?  For the past several years just about half our loan approvals had already been turned down by at least one other lender (in 2017 loan turndowns nationwide are up a whopping 60%) before they came to us, but because when an applicant goes to a new lender it starts a whole new file within the system most of the time we can get an approval simply by re-entering your information correctly without all the changes.  



This means the poor processing skills by the first lender or the fact that you filled out an online application is what caused the initial turndown.  So if you’ve been turned down, don’t give up, it might have been the Lender’s fault.



Because you don’t understand the importance of the information you are entering into the system this means you can innocently enter your data incorrectly or leave something out so that it has to be added or changed later.  This means that quite innocently you could be flagged for possible fraud and possibly turned down for your loan.  This is why we made a video showing you exactly how to fill out a loan application, the importance of each line item, and showed you ways you can strengthen your loan application. 



Consequently we make sure that none of your data enters the system before we’ve had time to talk to you and ask questions so that we can be sure we are entering accurate numbers.  It is a lot more work on our end, but our job is to give your loan the best chance of being approved, not to make things easier on us.



The video takes you through the loan application process step by step and shows you WHAT information is needed, WHY it’s needed and HOW you can improve your odds of a simple & easy approval.



If you’ll go watch the video at (Making a loan application) not only will you learn how to properly fill out a loan application but you’ll also see the problem with trying to make buying & moving plans based upon unverified information.  The loan application requires very specific information and the numbers used on it can be quite different than the information you might first be inclined to give to a Lender in a PQ.



Does it work?  YOUBETCHA!!  



About 50% of all the mortgages we close have already been turned down by at least one other Lender and yet in 2016 we had only one turn down all year. ONE!!  



As a way of comparison most lenders only approve about half of their loan applicants.  We normally can get people the same loan, the same down payment, the same interest rate and the same terms as the loan they’ve been turned down for which tells me they shouldn’t have been turned down in the first place. And the common element to all these people is that they did a totally online loan application and the stricter qualifying guidelines and extra scrutiny caused them to be turned down.



So now you've done a successful PQ, PreApproval or loan application, what’s next? 
The next step is for a Lender to issue a “Conditional Approval” letter.  


In Texas there are only 2 types of preliminary Conditional Approval
letters a Lender is allowed to do:



#1  Pre-Qualification  (Form A)

Obviously this is issued after you’ve been PreQualified. 



But a PreQualification is useless for the purposes of writing a real estate contract as Sellers want to know for sure you can qualify.  While it does help you understand how close you are to being able to buy a home & is a good very first step, you don’t want to go looking at houses with just a PQ.  



#2  Pre-Approval  (Form B)

PreApproval sounds official and sounds like it is giving you a very definite answer.  Unfortunately a mortgage PreApproval isn’t quite as definite as being PreApproved for a credit card or a car loan, but it is several orders of magnitude better than a PQ.  



Here’s a twist you’re not used to in other types of loan approvals.  For an official mortgage both you and the property have to be approved. 



The actual loan approval process requires quite a bit of other documentation that isn’t normally done at PreApproval time which is why a PreApproval is not an absolute approval.  BUT if all the information you gave us is correct, nothing changes in your situation, all the information you gave the Lender can be verified AND you buy an approvable property, then you can secure a mortgage!  It’s not perfect, but it’s as far as any mortgage Lender is legally allowed to go.  A Pre-Approval will be required if you are going to write any kind of real estate contract.



This means that if you decide you really want or need a Pre-Approval you have

to know to VOLUNTEER your income data & documentation

or the most a Lender can give you is a Pre-Qualification. 



Let me stress this again - unless you very clearly VOLUNTEER this additional 

information a Lender is forbidden by law from giving you a Pre-Approval 

and they aren’t even allowed to tell you that they can’t tell you.



So look very carefully at the top of any “commitment letter” you may get from another Lender and make sure it doesn’t say it’s a Form A when you need a Form B.



So now let’s talk about what constitutes a Loan Application for a bit since

many time frames & legal items are now tied to loan application dates!



It’s now super easy to make an accidental loan application.  If you give the lender 6 pieces of information it’s a loan application whether you want it to be or not!



Let me repeat that because it’s not something you’d expect.  If you give the lender 6 pieces of information it’s a loan application whether you want it to be or not!



Lenders don’t want things to develop into an accidental loan application nearly as much as you don’t want because it’s a lot of unnecessary work for them.  Let me explain.



If you tell the Lender these 6 things you have made a loan application even if pen has never touched paper and you’ve only spoken over the phone or exchanged a few texts or emails.  So be sure you tell a Lender no more than 5 of these things!


a) name

b) income

c) Social Security number

d) Property address

e) An estimate of property value or sales price

  1. f)And the loan amount



If you haven’t bought a house but are still in the looking stage you won’t have a property address which makes things simpler for you because you can’t give all 6 items.



Why doesn’t the lender want this to happen?  Under the new laws once your conversation becomes a loan application several things are set into motion & the Lender has to:


a) issue you a binding Loan Estimate - LE (which used to be known as a Good Faith Estimate of closing costs);


b) they have to officially enter you into the government system of record keeping which pretty well guarantees there will be lots of changes to your full app later and thereby will trigger the harsher underwriting.



LOAN ESTIMATE NUMBERS ARE NOW CAST INTO CONCRETE AND CANNOT BE CHANGED!  Which means certain of your closing costs are locked before it’s possible to know what they will be.  If there are any changes the Lender doesn’t have any option except to redo a lot of information to institute a “Changed Circumstances” or turn you down and begin all over again.   So as you can see an accidental loan application isn’t good for anyone!



If an exploratory phone call early in your looking process generated the accidental loan app then you probably wouldn’t be delayed, but if you are calling on a real house that you end up buying, this can make it take even longer to get to closing.



Because of this new law Lenders didn’t want to take a loan application until you had a fully negotiated contract because changes in the contract trigger the exact same requirements to the Lender.  



For over 2 years Lenders have been prohibited from taking a loan application prior to you finding a home which has greatly lengthened the approval process.  BUT . . . under Trump’s term he has already made some changes in enforcement that now allows us to once again take a full loan application prior to you finding a house which will reduce loan processing time, allow a quicker close date, give you time to work out any “bugs” in your situation & give you an edge over all those other Buyers out there running around with only PQs or PreApprovals.  This could come in real handy if you should get into a bidding situation with multiple buyers for the same property.



Now you know all you need to know to ensure you get the proper type of Qualification & the information needed to keep you out of trouble which can delay things.  If you’ve ever got any questions about any aspect of the buying and financing process don’t hesitate to give us a call.  We don’t work Banker’s hours we work when you need us.  So even if it’s after hours, weekends or a holiday, if you have a question call us!  If we can’t get to the phone instantly we will get back to you very shortly.


  1. (972)644-8244

(817) 204-0028



I know this sounds crazy,

but ya can’t make this stuff up!  




Next page