This month, we’ll talk to mortgage leaders about where the market is headed and how products are evolving digitally to suit buyers’ needs now. We’ll also explore emerging alternative financing options that are changing the game for buyers and sellers. Join us for Mortgage and Alternative Financing Month.
Have suggestions for products that you’d like to see reviewed by our real estate technology expert? Email Craig Rowe.
Qualia. Notarize. eClosePlus. eOriginal. Endpoint. Each of these companies are in the business of making closing on a home faster and less intimidating for the buyer.
The other thing they have in common is that no one at all remotely associated with the lender I used for a recent refinance has ever heard of them.
There I sat at 10:30 a.m. on a workday at my dining room table scribbling away my name and the date, page after page. I was even instructed that I can only sign in blue ink because the scanners they use to capture the forest of documents can’t prove that a signature in black ink is authentic. (They use scanners, which means they turn all the paper into digital documents. Let that irony waft over you.)
I couldn’t help but juxtapose my scenario with the fact that the entire country recently watched, via streaming video, a team of scientists safely land a parachuting robot on the surface of a planet that takes seven months to reach.
Despite a year of writing about the rapid pace at which technological efficiencies are changing real estate, I’m no longer confident that’s true.
Maybe being a technology columnist makes me too close to it all. Maybe I need to take a step back to gain a wider perspective of the market. I’m not immune to myopia. Maybe consumers are fine with the process as it is?
Point being, I thought my refinance would go a lot smoother than it did. So here are some tips and advice I hope you consider suggesting to your clients in your next blog post, email newsletter or Facebook post.
1. Interview the lender
The industry is crazy right now. Mortgage brokers are swatting at leads like a first-time camper does mosquitos. Regardless of how “good” your lender partner is, everything is different when everyone is busy.
Encourage your client to speak directly to at least three different companies and get loan estimates from each. How many people will they work with during the process? Do they have a portal for uploading documents? How do they help the buyer collect records? Do they partner with any digital escrow platforms?
I didn’t love that I was emailed by multiple people every time. If I had a question, which of them do I contact?
2. Document preparation
Remind your client that a refi is very similar to preparing for an original mortgage — but without any of the jubilation that comes with a buying a new house. Tell them that it’s sort of like volunteering for a root canal because halfway through the process they’ll begin hearing voices and be unsure if they’re coming from the other side of the anesthesia fog or if they’re actually standing in front of a mirror, swearing at themselves.
Years of tax returns. Years of business tax returns. Bank statements. W-2s. 1099 forms. It’s best to have more months and years of each ready to go because the numbers on each will become outdated as the process progresses at about the same pace granite erodes.
3. Appraisal waiver
Depending the home’s value and market conditions, there’s a good chance an appraisal waiver can be granted. This would be good news. Push for it.
As with any escrow process, hurdles become mountains, and appraisals are often the cause of such escalations. Waivers are more common on refinances and cash-out refinances, so your odds are good.
4. Lock it in
Don’t make the mistake of letting the best rate slip by. Because of communication delays, I missed locking in at 2.875 percent and instead did so at 2.99 percent.
Historically speaking, that rate is still fantastic. Nevertheless, a refi is all about saving money, and I could have saved more. When the lender starts talking about “locking in the rate,” actually pay attention.
5. Don’t sit and wait
The lender will lie (sorry: tactfully overpromise) about the length of time underwriting requires. You might even hear something about three or four days. I also believe in Bigfoot, so of course I took this timeframe as fact.
Advise clients that in this market, everything will take longer. Yes, it’s good for the lending business that it’s this busy, but it’s not good for those with a heart condition. Stay proactive with the lender. Call them, ask them what can be done to move things along. Mention bribery.
6. Sign everything immediately
In this instance, reading before you sign is overrated. Just have at it.
The sooner everything can be approved, the sooner that pinhole of light at the end of the doom tunnel this lending funhouse has put you through will appear within reach.
If the tone of the above didn’t make it clear, I had a pretty bad experience with this refi. I take a little of the blame. I hate paperwork, and I’m not a task-oriented person. However, I told my lender all of this, and I told them to call me more often than they emailed. They didn’t.
Overall, I know my lender meant well, and that I’m a challenging client. But their process is ten times more antiquated than I am incorrigible.
At the closing, the funds needed from borrower were double what we were shown on the closing disclosure. As of this writing, my partner has yet to sign. We may walk.
The mortgage industry needs to adapt faster. Or Zillow, or maybe Amazon, will come for you next. And you’ll have no one to blame.
Have a technology product you would like to discuss? Email Craig Rowe
Craig C. Rowe started in commercial real estate at the dawn of the dot-com boom, helping an array of commercial real estate companies fortify their online presence and analyze internal software decisions. He now helps agents with technology decisions and marketing through reviewing software and tech for Inman.
