Mortgage loan processing is undoubtedly cumbersome and challenging. Considering its critical nature, brokers and lenders have to spend considerable time and effort in reviewing, authenticating, and inspecting documentation from various sources. Additionally, adhering to the ever-changing rules and regulations is paramount to delivering quick and effective outcomes.
However, every problem has a solution, and so does mortgage loan processing. When carried out systematically, with a proper plan and effective oversight, mortgage processing can yield exceptional outcomes within a short period.
Simplify Mortgage Loan Processing in 10 Simple Ways
Handling mortgage loan processing through a planned and controlled process can simplify this task, help you meet deadlines, and spare time for other critical activities. Below are some tried and tested tips for smooth mortgage loan processing.
In-depth Analysis of the Loan File
You can start by evaluating the mortgage loan to determine the customer’s eligibility. Then, the loan processor must carefully review each file and determine whether the customer has the necessary documents for efficient filing. Further, before you receive the file, the lending agent (who acts as an intermediary between the client and the bank) must confirm that the client has received pre-approval for the loan.
Arrange the Documents
When it comes to streamlining montage loan processing, document arrangement is one of the most crucial steps. Pay stubs, bank accounts, tax records, renting history, W-2, and other income proofs must be gathered. Get in touch with a reliable bank to create a checklist of all the legal documents required and start collecting them to avoid delays in processing. This may take time since documents must be collected from disparate sources with due attention and precision. Getting the documents ready in advance will help get the loan processed faster.
Evaluate the Credit Report
Review the customer’s credit report to determine the required papers to address their credit profile. Consider clients’ assets, including their savings and checking accounts, as well as any pending bills (student loan repayments, car loans, etc.). Ensure the client is well-informed about written notice in case of late payments. Also, inform the loan processor of the relevant details to facilitate smooth loan submission.
Decrease the Debt-income Ratio
Your credit score will increase if you pay off your outstanding loans and credit card payments. Additionally, reducing the debt-to-income ratio raises the likelihood that the mortgage loan will be accepted. Therefore, it is advisable to pay off all of your debts and refrain from taking on any new ones until the mortgage loan has been finalized if you want guaranteed approval for a house loan.
Maintain Substantial Reserves
A house loan application might be turned down if the bank balance significantly drops. Therefore, always maintain the same amount of funds in the account that you disclosed on your initial application. Avoid NSF or overdraft costs as well, as these can be challenging to overcome.
File your Taxes
In the unlikely event that you haven’t filed your taxes for two consecutive years, have a word with your loan officer without any delays. To close on your mortgage loan, they are required to have your tax transcripts. The only situation in which this rule does not apply is if you do not have taxable income, for which you must file taxes.
Calculate the Exact Income
Never let your loan processor use the borrower’s best guess as the income entered into the file. Make sure the revenue reported on 1003 is supported by the borrower’s reports and paperwork. This is why it’s crucial to list your income sources in one location. Calculations must be based on bank statements, pay stubs, and income tax returns. Remember that the mortgage payments shouldn’t completely deplete the borrower’s income. The precise income calculation is crucial to the loan approval process.
Time management is crucial while processing mortgage loans. Make sure to start by asking the borrower questions. You’ll end up saving hours by doing this. Instead of making numerous calls to the borrower’s office to verify the borrower’s employment, ask the borrower if they can provide you with a direct contact who can provide answers or an automated system that can deliver the necessary documentation. This will expedite the procedure and give you more time to handle other crucial mortgage processing issues.
Save Money for Closing Costs
The lender will demand evidence that you have the money to cover closing charges. Possibly included in this are the down payment and other closing expenses. A day before closing, make immediate payments either through wire transfer or cashier’s check.
Attention to Detail
The mortgage application process might be delayed if minor issues are overlooked. Pay strict attention to every minor requirement made by the lender. Ensure that you meet the requirements for closing the paperwork well before the due date. Making sure all the details are taken care of will help the mortgage loan application process run smoothly.
Now that we have listed and explained the top ways to enhance mortgage loan processing, it’s time to answer the hows.
How to Implement Mortgage Loan Processing Techniques for Desired Results?
By default, the process of managing mortgages is complicated. On top of that, if you are still handling it manually or overburdening your employees with document management tasks (in addition to their regular duties), you will risk the outcomes as well as the productivity levels in your team. Even if you implement the tips given here or utilize automation, you will need to hire specialized resources to make the most of such techniques and tools. However, that will add to your costs.
Outsourcing mortgage loan processing is by far the best solution to overcome these hurdles.
Many third-party vendors provide all-inclusive services and solutions to help businesses with mortgage loans and related data management. In addition, they have teams of experienced resources who are well-acquainted with mortgage regulations and laws and ensure utmost adherence to avoid penalties.
By leveraging mortgage processing services from a reliable vendor, you get desired and verified outcomes along with the following benefits:
- Cost savings
- Extended support
- On-time delivery
- Access to a team of subject matter experts
- Data privacy
- Resource allocation
Hopefully, this article has helped you understand the best ways to manage mortgage processing while optimizing the outcomes, team productivity, and costs. In case you have any doubts, leave it in the comments.
Brown Walsh is a content analyst, currently associated with SunTec India- a leading multi-process IT outsourcing company. Over a ten-year-long career, Walsh has contributed to the success of startups, SMEs, and enterprises by creating informative and rich content around data-specific topics, like data annotation, data processing, mortgage loan processing outsourcing and other data related services. Walsh also likes keeping up with the latest advancements and market trends and sharing the same with his readers.