Frequently Asked Questions:  

  • What is a Mortgage Pre-Qualification versus a Pre-Approval??

There are many different opinions as to what a PRE-QUAL is, and what a PRE-APPROVAL is; but, generally most Loan Officers would agree that a "Mortgage Pre-Qual" is a quick initial analysis of your qualification status, including running your credit to see your scores, and an initial/brief review of your present income and liquid assets.   Based on that alone, many Loan Officers will provide you a Prequalification letter; which brings us to the next question, which is...

  • Why are many "Prequalification" letters worthless?!

Per above, what often happens is - a Loan Officer will look at the credit report for the scores and a single paystub for the income, and make a quick calculation about whether a mortgage can be approved for a certain price house, and then issue the Prequal letter because that's literally all they had time to do. 

HOWEVER, until a borrower's file has been run through the lender's Automated Underwriting Systems (AUS) to see what approval will be achieved, the Prequalification letter truly has no meaning.  

 

POSITIVELY - Andrew Taft will never issue a Prequal letter without running the file though the AUS, to have actual results with the necessary conditions that will be required to CLOSE!   And, you will be provided a copy of the AUS results.  

  • If you have successful AUS results, then is that a 'Mortgage Pre-Approval'?  

We would hope that successful AUS results would necessarily lead to a successful loan closing; ie, after the lender's Underwriter had completed their review of the file plus the appraisal.  However just from my own recent experience, there can easily be reasons why a case will FAIL in underwriting, even with good AUS results.    My recent case involved a Borrower who had an unexplained cash deposit coming into their checking account within the previous two weeks. In that case, it was  going to be an FHA mortgage, and FHA will not allow unexplained cash deposits within the previous 30 day bank statement.

 

And the catch is that, the AUS system is not able to detect what item is or is not an unexplained cash deposit, so this particular instance was a perfect example of a case where an actual human being, either the Loan Officer upfront or the Underwriter later on, needed to put actual eyeballs on the file in order to ascertain whether it was a case that could be successfully closed or not.

To answer the original question above - what we can conclusively say, is that if we have successful AUS results, and of course those results are based on correct data input in the first place when the AUS is run, and then additionally an actual human being such as Loan Officer Andrew Taft has reviewed ALL the crucial documents including the most recent bank statements and also at least one year to date paystub - then in that case we could say that the application is 98% likely to pass the lender's final underwriting review. 

THE BOTTOM LINE IS:   we cannot say that a case is pre-approved until an actual underwriter at the lender has completed their initial review of the file - and then it will be "Approved with Conditions" rather than 'Pre-Approved.'  

However, THE GOOD NEWS is - due to the size of C2 Financial, we have access to lenders that will allow for a "TBD" review of a borrower's file.   IE, meaning that, the lender will review the file before you have a house selected, and without a contract signed on any particular house.   Most lenders these days don't want to work hypothetical files, however, because of our annual volume, we are able to offer that service, and this is something that Andrew Taft does on a regular basis.  

  • Why does it take so long for many lenders to underwrite and approve a mortgage for a house purchase, and schedule the closing?

The fact is, it doesn't - or in other words, it shouldn't! 

Here's what happens:   When you sign a contract for a house, you will have an Option Period which could range from 7 to 10 days.  And then, MANY times, a lender will do absolutely NOTHING until the option period is over, because they do not know if you will possibly cancel the contract during the option period if mechanical issues are discovered.   So just right there, you have eaten up 10 days.... next, the lender orders the appraisal, which these days can easily eat up 14 days or even longer, so now you are at 24 days.  Next, it's very common that there may be issues with the appraisal that need clarification, which can take another 3 days, and now you are at 27 days, WITHOUT any other issues of any significance coming along, which can easily happen, adding even more time to the case!   And that's why "working in series" as above rather than "working in parallel" can easily take 45 days to close an otherwise straightforward mortgage file.     

 

  • How can C2 Financial close faster? 

As the largest mortgage brokerage in the U.S., C2 Financial has relationships with the top 100 wholesale lenders in the U.S.; most of which have set up their systems to respond very quickly on purchase files, and avoid the "hurry up and wait" syndrome described above.  One particular lender that C2 Financial represents is the largest wholesale lender in the U.S, with more annual volume than Wells Fargo and Bank of America, and that lender has averaged better than a SIXTEEN DAY turn time on home purchase files for the past year, including the appraisal! 

If you need to close FAST, call Andrew Taft! 

  • What is a rate lock?   

At some point between your initial application, and a week prior to your closing date, you will need to SELECT what interest rate you wish to have for your mortgage.   Rates change daily and sometimes during the day - and of course, your selection of an interest rate can only be made from the actual rates that are available at that moment/that day.   Within that range of interest rates that are available at that moment - what you do have control over, is whether you may elect to take a HIGHER interest rate, in which case the lender will give you a cash credit at closing, to be applied toward your closing costs.   IE, the higher the interest rate you select, the higher the lender's cash credit to your closing costs will be; and the lower the interest rate you select, the lender credit will therefore be less, OR you may in fact pay 'Discount Points' to achieve a particularly low rate.   We will discuss this at length before you lock a rate - generally, you would only pay Discount Points if you are sure you will own that house for years to come, in which case you can save money in the long run by paying Discount Points to have a lower monthly payment.   (Most people do NOT elect to pay Discount Points.)