Before I go any further, please remember that every home loan application is different.
In fact, this couldn’t be a more powerful statement considering today’s unbelievably favorable mortgage market conditions.
Since your home loan application typically consists of a credit score, employment documentation and property valuation, just to name a few of the basics, this ultimately creates many variables for your lender to evaluate when determining your overall eligibility to qualify for a loan.
Naturally, if your credit scores are higher, then that allows your lender to spend less time on this area and focus in on other parts of your application.
If your employment documentation is clear and not complicated, your lender can move faster through this analysis too.
Lastly, if you are either refinancing a home with lots of equity in it or you are putting a large amount of money down toward the purchase of a home, then your lender likely won’t get carried away with their property assessment tools as well.
I’m briefly cruising through these items because it helps to show some of the major parts of your file where they could be different from one applicant to the next.
Even if the credit, employment and property components are all fantastic, there are still different “levels of fantastic” within each of these buckets.
Plus, you must factor in the timing of when this all takes place along with the type of loan program you are tracking down. Collectively, this continues to contribute to the tons of differences between your home loan application and someone else’s application.
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In this respect, that’s why you might get a specific rate although another applicant receives a different rate, even though your basic file components are very similar.
Again, there’s much more to it, but this is a good starting point. Therefore, it’s makes it harder to compare terms from lender to the next too.
So, that’s where today’s ultra-low rate environment and sophisticated lending technology tools make it even more complicated, yet easier, all at the same time.
When rates are low or trending lower, there are more options for borrowers to either include or exclude certain home loan expenses into their rate.
This means they can take a slightly higher than market rate and have less fees or no fees or accept a lower rate and have fees added to their principal balance or bring in cash instead.
This strategy is different in an increasing rate environment. No matter what, somewhere along the way there are expenses or fees, whether they are included or excluded in your rate, they exist.
Finally, the always improving and super sophisticated risk assessment technology used by your lender has created plenty of opportunities for you lately to walk-in and walk-out of your lender’s office without the need for an appraisal, income or asset documentation necessary to approve your loan.
While this can be helpful, it can perhaps limit options for you as well. Everything is moving fast. However, fast is not always good.