Vail Daily column: Instant loan applications are not for everyone
Ever since Super Bowl Sunday, TV viewers have seen a lot of advertisements from one of my competitors for a rocket loan in which one can allegedly apply for a loan with nothing more than a smartphone. This includes receiving all disclosures, uploading all documentation and with a click here and a swipe there, you’ll get your money in no time.
Mortgage lenders are a competitive bunch, and we are always looking to make things easier for the consumer. If it were really as easy to apply and process a loan application as this program makes it appear, then there would be a lot of companies offering it. Loan programs like the rocket loan might work for some borrowers, but not for most, particularly in a place such as Eagle County.
Here, we have a population of people who often have multiple jobs throughout the year, and many have changed careers several times. We also have properties that are unique in terms of deed restrictions, mixed-use buildings and condos that have short-term rental units mixed in with full-time owner-occupied units.
Sometimes, I spend hours analyzing a borrower’s situation trying to figure out how to make it work. Often, it comes down to knowing the players involved in the whole picture and how different local companies handle their seasonal staffing, bonus pools and benefit packages that lead me on how to document enough income and structure a loan application for a successful approval (or save everyone the effort and suggest that we might have to wait a year and the applicant needs to pick up extra shifts and save more for the down payment).
I then have to match the borrower’s situation with a lender who is likely to accept the mix of factors. We represent numerous lenders and, while much of the rule book is standardized, every lender has quirks and different interpretations of that rule book. If there are several lenders who might take the deal, then I can choose the one with the best rate for the borrower.
A home mortgage is a complex transaction, and consumers need to fully understand what they are signing up for and have an experienced professional guide them through the process. It is not like applying for a credit card you can just pay off and cancel if you don’t like it after three months.
Home loans require about 25 pages of disclosures, and the borrower should have a basic understanding of what is being disclosed. It is not like clicking on the computer to confirm that you agree to the terms of service on your Amazon account. We’re talking about committing to a 30-year stream of payments here and putting your home on the line. I’ll guarantee to you that nobody reads 25 pages of disclosures on a smartphone screen. While there is nothing nefarious in these disclosures on a rocket loan”or any other government-backed mortgage that a consumer should be overly concerned about, the process of disclosing the full terms of a loan on a smartphone screen is somewhat disturbing in that it marginalizes the need for a consumer to at least try to understand what is being disclosed.
My view of these instant smartphone mortgage applications is they are more hype than substance. For some people, they will work fine, but most people will be better served by dealing locally.
Chris Neuswanger is a loan originator at Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage related inquiries from readers. His blog and a collection of his columns may be found at http://www.mtn mortgageguy.com.