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Mortgage Qualification & Home Account

Why can't banks or other financial institutions tell potential clients what are needed to get a loan before applying?

Why can't banks or other financial institutions tell potential clients what are needed to get a loan before applying? Wouldn't that save everyone time and headaches?

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Highlights

  • Qualifying for a mortgage is difficult because of the variables involved.
  • Home Account inverts the qualification process and makes banks compete.
  • Home Account finds the best rates and optionally locks them in.

Life would be easier and cheaper for everyone if getting a new mortgage or mortgage refinance was as easy as ordering a hamburger. I agree that it seems cruel for banks and mortgage companies to market mortgages to people, and then when people apply they are told they do not qualify.

The simple reason banks and mortgage companies do not list their minimum qualifications on their Web sites is the qualifications are complicated and vary by applicant and loan provider. They also vary over time according to market conditions, and region.

No two applicants are alike. Even two applicants with identical income and work history, credit scores, down payments, and home prices may get different answers from a lender if one applicant's house is in a flood plain and the applicant cannot find inexpensive flood insurance, for example. Just as no two houses are the same (even in a tract neighborhood) no two applicants will have the same set of financial history, debt to income, or credit scores. An applicant with one weakness may make up for that weakness with significant other strengths.

Home Account 

  1. Home Account is a new Web site that addresses the difficulty in shopping for a new mortgage or mortgage refinance by gathering more in-depth information from applicants than is customary. Home Account then finds a lender with the lowest rate, locks the rate, and provides the applicant with a solid quote. Here is how it works.
    • Home Account has an online process that lets applicants pull their credit report for free (and presents it in a easy-to-understand format.
    • Shows applicant's their credit score online.
    • Pulls an automated valuation of the applicant's home that is highly accurate, allowing an estimate of your loan-to-value (LTV is a core calculation in getting a mortgage).
    • Calculates the applicant's debt to income (again, DTI is another core mortgage calculation).
    • Gives the applicant a Mortgage Grade -- a proprietary rating system to predict how likely the applicant will get the best mortgage rates (it also give tips on how to improve).
    • Shows applicants actual rates for available mortgage loans, and not market rates, but REAL loans that the applicant can rate-lock immediately.
    • Home Account also compares the cost of each loan option, including fees, rates and all costs. This lets the applicant make an informed decision on the best available mortgage.
    • The applicant can select a loan and rate-lock that loan, which the lender has to abide by and cannot bait-and-switch (which is an unfortunate industry practice).
    • In theory, this lets applicants apply online, get the best rates, and lock in a low rate. Home Account really has wowed us on the transparency it brings to the mortgage business and the level of empowerment that is provided to consumers and home owners.
  2. It takes about 10 minutes to apply online.
  3. Submit your social security number and your personal information to a private server over a secure connection.
  4. You must qualify. Your need a solid Mortgage Grade and your loan to value, credit and debt-to-income must be strong enough to be approved for a loan.
  5. You can pick the right rate, loan terms, and lock your rate online.

Home Account allows applicants to apply for a loan without being telemarketed by lenders. The process of applying and making lenders contact you and compete for your loan is a great way to get a loan and to make loan officers compete for an applicant's business. But for many consumers, Home Account is a good way to find a low rate online quickly and without hassle.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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