Mortgage Loan Commitment Letters are the way to show the sellers the money. When I issue one it is my commitment that I have a mortgage waiting for the client, they just need to find a house.
As the housing market improves, we are hearing more reports of multiple offer situations. Not every client can afford to be the highest bidder, so some are sweetening their deals another way: by getting the seller their money the faster than the compition.
But not everyone can be a cash buyer either.
So we must make our borrowering clients as effective as cash buyers.
According to Ellie Mae, the average time required to process, approve and fund a purchase mortgage is 47 days, up 12% since this time last year. And since purchase applications are increasing (from an already multi-year high) and government regulations have required additional reviews and quality control tests for underwriters to perform, underwriting approval times are not expected to improve soon.
So if a home seller prefers a buyer who can close in less than 30 days over one who asks for 60 days, what do we need to do to execute a 21 day funding?
Gathering paperwork is the most time consuming element in the process. If you have received your loan commitment letter without turning over complete documentation, please know you are a long way from Approval. An ideal pre-approval process should contain a complete underwriting file with only the property-related details missing.
Share everything with your lender; be open and honest. Not doing so could constitute fraud, and they will uncover your omissions anyway. The more you share with your lender, the more equipped they will be in helping you close quickly.
With complete information already turned in, and most "surprises" accounted for, buyers should be ready to move immediately into the underwriting stage upon turning in the contract.
This level of pre-qualification can save a tremendous amount of time and improve the quality of the Loan Commitment Letter.
Soon the market will recognize your Mortgage Commitment Letters to be as valuable as seeing a briefcase full of money.