If you spend a few minutes in physician chat rooms where the topic focuses on mortgages, you're more than likely to read nightmare after nightmare and horror story after horror story. It's so devastating to see what happens to a crushed home loan and what closing can do to a family.
One time out of the blue, we received a call from a young resident while he was relocating to Utah. The gentleman was working on a home purchase for two months and he was called the day before his closing and two days before he anticipated moving into his home with his wife and two kids.
They were literally driving across the country in a U-Haul truck, and told they were declined for their mortgage loan. He was wrecked. He did not know how to respond to that. He couldn't believe that he could get so deep into a transaction, supposed to have his keys the next day, and move into his home, and at the last minute he was declined.
What we found out is that the loan officer had failed to realize that he had about $170,000 in student loans and they all showed a zero payment. The loan officer made the mistake of just excluding all of that debt from his debt-to-income ratio. When the loan finally made its way to an underwriter, the underwriter had not made the same mistake and eventually declined the loan.
Explore with us three pitfalls that you can implement today in order to make sure that this doesn't happen to you.
Pitfall #1: The Yes Man vs. The No Man
There's a tremendous difference between a mortgage broker and the underwriter. As a matter of fact, there is tension between the two that can lead to these issues.
We call it biggest conflict in mortgage banking.
Quite simply the loan officer is paid to say, "Yes." No loan officer in the country has ever been paid on a loan when they said, "No." In order to get paid, they need to say "Yes."
Think of it as the carrot and the stick.
The conflict arises because the underwriter is the gatekeeper. The underwriter is the quality-control person. The underwriter is responsible, and truly their job and their reputation as a professional underwriter is on the line with every loan that they sign off on.
That's the person who's paid to say, "No." It's not that they want to say no, but it's their job to make certain that everything fits in the box. The income, credit, and down payment have to fit. All those things have to add up and qualify into the underwriting guidelines, and it's at that point where, unfortunately, many physicians are turned down and are now scrambling to find a solution.
Instead, reverse engineer the process to go through underwriting before you write a contract or an offer on a home. This virtually eliminates the chance that you're going to have a problem with the transaction.