Have you ever seen scientist Bruce Banner turn into the Hulk? Banner goes from this nice, tranquil genius into a ballistic monster in a matter of seconds. It’s scary!
In the mortgage lending process, we’ve actually learned how to pull this off. Loan Officers, REALTORS® and Borrowers have all experienced the painful, rabid transformation into one of Marvels most angry characters. It’s relatively easy, just requires one thing:
A last-minute denial on a loan.
BAM! Instant mayhem. LOs and REALTORS® lose a commission, the poor Borrower loses out on their new home (or lowering the payment on their current one in a refinance). Ouch.
Now, this isn’t a commentary on WHY last-minute denials happen (too many examples, too many words to cover today). Instead, let’s discuss why your lender hates last-minute denials as much as the LO, REALTOR® or Borrower does. We’ll start with a question:
How much does it cost a lender to close a mortgage loan?
I’ve asked this question for years and the answers I’ve heard range from $500 to $5,000. A scale this wide says we’ve done a lousy job of educating people on how important this number is in our industry.
The Mortgage Bankers Association reports the cost to close a mortgage loan is $8,475*. Not $500, not even $5,000. No, over $8,000. When you back out the commissionable part of the cost you are still around $6,000.
So every time a lender has to deny a loan “at the last minute” what they just did was open the window and throw away $6,000+.
Put another way: to say NO that late in the transaction means the lender spent $6,000 to practice a loan closing. (“Practice, you talkin’ about practice…” comes quickly to mind). You can’t survive doing that. You just can’t.
Ironically, the best way to avoid last-minute closing problems is to be excellent in the first-minutes of the application process. Good questions, proper documentation, thorough dialogue and quality work up front gets the loan on the right track leaving the station - avoiding the wrong destination down the road.
It also keeps Bruce Banner from losing his shirt.
"I will be out of the office all day Thursday and possibly part of Friday fixing a few things around the house. As most know, I am a ‘tinkerer’ so you never know what I’m bound to take apart and reassemble once I get going.
In my absence this email box will be monitored carefully by several of our summer interns, a few of which are ‘students’ from the Youth Correctional Training School in Cranston, big shout out to YCTSC – in the house! Love the ankle jewelry, styling!"
Orignally posted June 27, 2019
Posted by Shamrock Home Loans on