When you first begin the mortgage loan process, you’ll be working with your chosen loan officer. Quite a bit, actually. And I do mention ‘chosen’ on purpose because you do, in fact, have a choice. If you find out early on that you and your loan officer don’t exactly hit it off, you can stop the process and find someone that you can work with. Anyway, there will be quite a bit of back and forth, especially in the beginning.
You’ll need to begin documenting your loan file, which includes things like your paycheck stubs, W-2s, or maybe if you’re self-employed or otherwise get more than 25% of your monthly income from sources other than an employer, you’ll be asked for your last couple of years of federal income tax returns. Bank statements to show you have enough money to close, and so on. You’ll also read, initial, and/or sign your fair share of loan documents and disclosures. Once all that has been done, you can mostly sit back and wait for your loan officer to do the rest.
But you can’t rest on your end and just wait for the loan officer to get back to you. You can indeed back off a bit, but don’t lose contact with your loan officer during this early stage. Your loan officer will take your initial information and obtain an initial preapproval. At this point, you may be asked to send in a few more items, but essentially, you’re mostly done at this point. But you can’t just switch everything off and wait.
Your loan officer has more than one loan file to work on. Don’t expect your loan officer to update you on every single step along the way. It’s not needed. It might seem a bit quiet on your end, but the plates are really spinning at the loan office.
I’ll give you an example of how important it is to be proactive. Let’s say you initially get quoted a rate of 6.00% for a 30-year loan. But you don’t think it’s a good idea to lock that rate in because you think rates are going to move lower in the very near future. That's a gamble, but it’s not uncommon.
Okay, during this ‘quiet time,’ rates begin to move up inch by inch. Or in this example, .125% by .125%. Over the next couple of weeks, rates have moved up to 7.00%. Bad news, right? However, remember that during this period, you’re not the only loan file on the loan officer’s desk. Don’t expect your loan officer to call you each time during these incremental moves. That means you should be proactive here and contact the loan officer directly to get an update on rates and determine whether you should lock in.
The danger here is that it’s quite possible you no longer qualify when the rates are at 7.00%. You do get a rate lock information form that tells you about locking a rate, so make sure you read it. It’s one of the more important pieces of paper you’ll review.
