The Fastest Way to Get Approved for a Mortgage
I’d like to share something with you that will give you an advantage in the mortgage application process.
This technique is the secret sauce I use to get the majority of my clients approved for a mortgage in 21 days or less.
In truth, there’s nothing “secret” about it.
This technique is simply based on due-diligence and common sense which, as you know, sometimes isn’t that common.
I call this technique the “Two Funnels.”
If you take this to heart, you’ll find working with a lending company, bank, or mortgage officer becomes much easier. You’ll also potentially increase your ability to get approved for a mortgage.
Let’s get into it…
The Two Funnels
Imagine two funnels, like the ones you use for cooking. The first funnel is right-side-up. The wide part is at the top and the narrow part at the bottom. The second funnel is upside-down. The wide part is at the bottom and narrow part at the top.
The first funnel is functional. You can pour a bunch of water into that wide container at the top and a steady stream of water will flow out of the bottom.
The second up-side-down funnel is not functional at all. If you pour the same amount of water into that small hole at the top it will certainly make a big mess.
When it comes to your mortgage, we want the process to flow like that first funnel.
In order to do that, you begin the process by giving any/all of your accurate financial information up-front. That way it’s easier for your loan officer compose your file and submit it to a bank as fast as possible.
On the other hand, if you begin the mortgage process with too little (or inaccurate) information, the whole process takes much longer to complete. As time goes on, more problems arise. More emails and phone calls need to happen. Emotions often start running hot. Overall, the experience becomes a big mess, just like that second funnel.
Here’s a visual on the two funnels to keep in mind:
How to Make The Mortgage Process Flow Easier
If your loan officer is not asking for a lot of details up front, it’s likely an indication that problems will arise at some point in the future.
Also, as a consumer, if you are not willing to give your financial information to your mortgage officer, then problems will also likely result. On this point, I understand some people’s unwillingness to share sensitive financial information with a mortgage officer. Often, within a couple of days of meeting them, they’re asking you to show them your entire financial situation. For some people that’s a vulnerable position.
There are standard privacy and liability agreements mortgage officers are required by law to make in order to practice. Still, you need to find someone you can trust. In the article, How to Choose The Right Mortgage Officer For You, I share some tips and suggestions for qualifying your officer. Trust is one of the most important elements of any business situation, and there are certain questions you can ask that will help you choose the right person. So, check out that post for some additional insights.
What to Expect: Documentation You’ll Need to Give Your Mortgage Officer
Since the nature of loan is so closely related to your personal finances, it’s also important to understand what any mortgage officer needs you to share with them.
That way you can prepare in advance and know what to expect when you speak with a professional.
Let’s take a brief look at which documentation you’ll need to give your mortgage officer in order to help them do their job properly:
- Proof of Income. Most recent pay stubs. The key here is showing your year-to-date earnings. See, your average annual income is what lenders want to know.
- Proof of Employment. If you have a job, you need to provide a list of your employers for the last two years (min). That list should also include all your employer’s contact details. Or…
- Self-Employment Docs. If you run your own business you may have to provide some additional documents. Sometimes you’ll need balance sheets, federal tax returns, or profit-and-loss statements for the last two years.
- Social Security Number. Anyone whose name will be on the loan needs to have their SSN to verify their identity. They’ll also use this to check your credit.
- Proof of Residence. Remember, consistency is what lenders what to see. They want to make sure you’re not a fly-by-night type of person. So, prove where you’ve been living for the past couple years.
- Tax Documents. There’s a 99.99% chance you’re going to have to provide tax documentation at some point. Lenders want to see your W-2 statements and tax returns to see how much money you earned in the previous years.
Collecting all the relevant information at the beginning of the mortgage process is the fastest way to get approved. This is often a big mindset shift for both consumers and real estate agents. Both want the approval-letter as fast as possible. I totally understand that.
The first three to five days of the transaction before the transaction starts, before you find the property, the real estate agent should send you to the loan officer so they can do all that research upfront. Then when you get into the transaction, everything can move relatively fast.
At the time of writing this, we’re closing files an average of 16 days versus 45 days for most traditional lenders in the country. The reason for that is we focus on getting all the right details upfront.
You would never go to the doctor and tell them: “I don’t feel well. Just give me antibiotics.” You’d want them to give you a full examination before prescribing anything. The same can be said for your loan officer. They should never begin working on a file that is incomplete. The loan officer should have systems in place to collect all the needed information quickly before an escrow opens.
Keep the The Two Funnels technique in mind when applying for a mortgage. You may also find it has more applications to your life in other areas too!
Spend 80% of your time sharpening your axe, and 20% chopping down the tree.
Until next time,