https://www.youtube.com/watch?v=S5Wh8JLYqUU
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Jennifer: Welcome back! So today, I'm joined by Jen and Sam, and we're going to be talking about why instant pre-approvals or pre-approvals without documents are garbage, and as a buyer, you should never trust them in a million years. So, if you're new to the channel, if you end up working with me, you're either going to be working with me and Sam or me and Jen. They're both licensed in a bunch of states, they're excellent, amazing, and they look at every single file that comes in.
So, here's my first question, ladies. If someone fills out an app, let's say they fill out an app and they give you nothing else, do you – what do you think the accuracy of that app is?
Sam: Zero.
Jennifer: Would you trust it?
Jen: Yeah, you probably got your date of birth and your social and your name right, but other than that, that's all I'm assuming is right.
Jennifer: Right, and the reason that is, is that a lot of times, with an online application, as a buyer, you're filling it out, but the way that you think your income is versus the way a lender looks at it, that's a huge one. Um, what are the other things that you see tripped up? Like, I see mistakes on applications where someone clicked the wrong box. What are you guys cleaning up on these apps where if you didn't look at it, they would just be denied?
Sam: Assets is a big one. People don't list certain assets or just list them incorrectly because you're just guesstimating what you think is in there.
Jen: Like not including retirement assets or things that could be used as reserves. There's so many different types of assets that we need to kind of go over.
Jennifer: Right. And so, on that note, I think what a lot of people don't realize is, if you're working with a lender where they're offering an instant pre-approval, they're only going off of the information you provide, whereas Jen and Sam, Jen, I mean, you reach out to people and you're going through the app. How often are you changing the numbers in the application from what they put in after you review the docs and have that call?
Jen: 99% of the time.
Jennifer: Yeah. And you're – it's the income. It's the income. People don't know. You think you make a certain amount of money, but there are certain things like bonus, commission, overtime. Uh, we use it to your history. Generally, this is a blanket statement, but, you know, one to two-year history of that income. Uh, I can't tell you how many times I get on the phone and I say, "Oh, look, you have X amount of bonus income," and they go, "Yeah, I just started getting that this year," so I have to take it out, can't use it.
Right. And I have people go, "Oh, but I have a pre-approval letter from someone else," and I'll go, "Well, they did a bad job. You didn't get a good pre-approval letter. You shouldn't – you know, you probably shouldn't be out shopping. I don't have an approval." So a lot of people are out shopping on an approval where somebody didn't ask the questions.
And sometimes I'll just say to somebody, "Did the lender that gave you the pre-approval ask you any of the questions that I just asked you?" And they go, "No, I didn't even know I couldn't use this income. They didn't tell me that."
So, some of the stuff I hear – I mean, people moving states and they don't have a job in the new state, and they're not told that they can't use that income. So I change the income all the time. So, be – I mean, you're going to state your income, and then we're going to have a very deep conversation surrounding the income, and then we're going to qualify you on what we can actually use for income, which is what you want before you go.
I think that what people need to know is, look, the reason why so many lenders are offering – because we had Alyssa and Sandy call a couple of big lenders, and one of the big lenders was like, just fill out the app, we do an instant pre-approval, and everyone's pushing for that because there's been research done that shows that as a consumer, you want whatever is fastest and easiest. But here's the problems with loans: fastest and easiest doesn't mean it will close.
So, Jen, if you did a shitty job – excuse my language – if you did a bad job and you just issued, like, you didn't look at docs, you didn't – you know, you just gave people whatever the computer said, what – how many more loans could you do?
Jen: Oh, my gosh. Well, I wouldn't be able to sleep at night, number one, because I just – I can't. I don't roll that way. Uh, way more loans. Are you kidding me? I could – I could go through double the amount of applications I go through in a day if I didn't look at anything or I didn't get on the phone and have a deep conversation. If I just called you and said, "Hey, everything looks good, here's your letter," and sent you on your way, I could get through double to triple. It's the phone calls; it's the digging that takes a while.
Right. And – and that's what I think people need to understand too, is that the reason why they're doing this method, besides the fact that data has shown that you want it fast and easy, it's more cost-effective for them. Because if you get into contract, that's when they actually start doing what Jen and Sam are doing day one, when you're getting preapproved. And if it doesn't work out, they can blame you. They say you entered the data wrong. Whereas any professional lender knows that you're not going to enter it correctly, but they just want to get as many – uh, it sticks in the fire, per se.
Um, Sam, are you seeing similar things? Like, are you changing income, or do you feel like –
Sam: Yeah, 100%. I mean, income always needs to be changed because there are complexities, income that wasn't included in the application that would get you to where you want to go. Like, it goes both ways. So, income's a big one. Um, and just, you know, going over all of the numbers, everything in the application. Sometimes people even have second jobs that we didn't know about. Like, so much needs to be dived into. And then, with second jobs, you have to have a two-year history, so we have to, you know, totally sort that out.
Jennifer: I think about, like, someone in the comments saying, "Well, I'm on a pension, or I'm on VA disability, so that's easy." Guys, we gross up VA disability, but the computer doesn't. So if you fill out an application assuming it's going to get grossed up, you could get denied if you don't have an actual lender looking at that, grossing it up. Same with BAH and BAS if you're active.
Um, so, Jen, what's the biggest pushback you get? Because we get pushback for doing extra work for free to help you guys, because that's what this is – this is extra work for free to help you. So, what do people say to you sometimes?
Jen: Jen, I get pushback. I get the, "Well, I already have a pre-approval letter from someone else, and they didn't ask me for any of this." And, you know, I think people that generally don't feel like there are any holes in their approval can push back a little bit more. And the only thing I ever say is, "I want you to picture this: I give you a letter today without having all the information. I send you out house shopping, you and your wife find your dream house, you and your husband find your dream house, you go into contract, I send you to underwriting, it falls apart because I didn't do my job up front, and I didn't take that time up front. Now you're heartbroken. You already started planning where you're going to put your furniture, what school you're going to put your kids in. I mean, think of all the stuff when – when you buy a house, how connected it is to your dreams, and your heart, and your happiness, and it's the biggest thing you'll ever do, right? And now you don't get to do it because I didn't take the time upfront to give you a clean approval. And then you might lose your money."
Jennifer: So, there's money on the line as well. They're going to lose the money for the appraisal, the inspection... You know, and people go, "Well, wait, if the lender gave me a bad preapproval, aren't they liable?" Absolutely not. And they don't care, is the other thing. I think it's sort of like a crapshoot, like, how many applications can I get through? How many people are going to go into contract, and then we're going to have to save them in underwriting, or they can't be saved, and those people just... they're gone. And those people aren't going to come back to that lender, and that's the other thing I never get. If those lenders aren't getting referrals because they did a bad job, why don't they care about that? I never get that.
And so, I mean, look, what I think a lot of what we see is that the lenders that are doing these instant approvals, they're call centers, right? So, the odds the client's going to come back... If you start... I was on Reddit last night, I sent it to you, Jen. I knew Sam would dig into it because Sam loves some Reddit gossip. But, you know, it was a really large VA call center, and the comments were savage. You know, but here's the thing: they're going to make the phone ring every single day. So, even if you had a bad experience, because of how much money they pay on marketing, what they sponsor, giving away free houses, people are still going to call.
Samantha: Yep, right.
Jennifer: Sam, what type of... So, Jen, you get the document pushback, but you always explain we're doing this, you know, and look, we won't do letters that, if like, if you're self-employed and you're like, "I filled out an application, but I'm not giving you documents. I want a letter." No way, never. Never. And I've said to people, "I'm, you know... if I get a lot of pushback, sometimes I've had people like, 'Well, I'm not going to work with you.'" And I say, then we're just not the right fit. You know, we would love to work with you, but if you're not willing to do what we need to do to give you a good approval, then it's just not a good match. I mean, not everybody is a good match, you know. They might not want to do the work, and if they don't, that's totally up to that person. We're just... we're not going to give a half-assed approval, no matter what. Don't... don't ask, don't ask, guys. Don't do it. Don't try to commit. I'm not gonna do it.
We've had L frauders recently though, so that's been refreshing. But Jen's right. And here's the thing: so if we get all your applica... excuse me, all your documents, and we fully underwrite you, which is what I push to do... Most lenders don't do this, and people are like, "Well, why not?" It costs money, guys. All of this stuff costs money. Having a Jen, having a Sam, having a Jennifer, having a Maria, a Chadwick, a processor, you know, an underwriter, all of it costs money, and most lenders don't want to spend a nickel unless they're going to... they know they're going to make money off of you, you know. And that's where we're different, especially in the VA space. And I... you know, we do everything, but the VA space, it's gotten such a bad rap with real estate agents because of the larger companies that are doing stuff like this.
Um, I know I'm rambling now, but I swear to God, it's important. So, I did this... uh, Reddit thing, I know, and um, someone was telling me that one of the largest VA lenders in America used to give out pre-approvals without a COE or any documents at all. They didn't even run DU. They would just give people... right, because look, it doesn't cost them anything. If I just give someone a letter...
Samantha: Sam, what do people push back on you, or do they just... they realize you're such an angel, you're in space, they want to help you get to earth?
Samantha: That's true, yeah. No, people definitely give pushback, um, because we do, you know, want to get all that information up front. So, it's kind of 50/50, I feel like. Um, usually, once you explain why we do it to people, they're pretty understanding, uh, because they also want their money protected and themselves protected. So, after that, it seems to go pretty well. But, I mean, if you ever have questions on why we need something, just ask, and we're more than happy to answer.
Jennifer: Yeah, and that's the thing. We'll tell you why we're looking for a specific document. Um, but we also have people on the other spectrum that are amazing. We have our, I call them A+ plus clients, right? Where they've watched the videos, they're like, "I have everything," you know, they're like trying to beat Maria to the clock. They're like, "I got her, but what she wanted before she asked." Um, do... are you guys seeing more of that? How do you feel about that? You guys have to love that, right?
Samantha/Jen: I do, it's like dream clients. But don't give me anything unless I ask for it, please. Because there's such a thing as the can of worms, and sometimes you can put something in the file that I wouldn't have asked for. Uh, and then once the underwriter sees it, they see it. There's no deleting documents, you guys, so be careful what you upload. If we didn't ask for it and you just think we need it, please reach out and confirm that we need it.
The other huge thing, while I am thinking about that, is uh, if you say you are separated, if you are divorced on a mortgage application, say you're divorced. You are not separated. You are unmarried. So, the second that you put you're separated, and I get on the phone and say, "Hey, talk to me about that. When's your divorce final?" You go, "Oh, I got divorced 10 years ago." You already uploaded your divorce decree because the system's going to ask for it, and we didn't need it. So, can of worms. Just don't upload anything, uh, stick to the list. And if you have questions, want to call one of us.
So, I think, you know, if you guys want to go through the pre-approval process, which we're always happy to do, um, you know, just be... fill out the application. It takes five to six minutes. Super easy. Talk to Alyssa or Sandy first to make sure it works with your individual timing and goals because they do a lot of the mortgage planning up front to make sure, like, if you don't want to buy a house for two years, I don't want to put you through full underwriting because I will do a hard credit poll to full underwrite, and that's a waste of the credit poll, and everything's going to change in two years. Um, and in terms of documents uploading, you know, you do want to wait for that list because sometimes we only... if you're conventional, I might just need one year of taxes if you're self-employed. Um, so you definitely want to do that. And then be mindful, you might want to check what you're uploading, because we can't delete anything that you upload, even if what you upload is... Do you guys know what I'm saying?
Samantha/Jen: I do, oh yes. I've seen, uh, doctor bills, uh... I over the years, I've seen... Yeah, we "unfile" them, which means we put them in a folder where nobody looks at them, but we absolutely can't delete them, unfortunately. And yes, there's been some interesting things uploaded over the years. I mean, there was the porn, there was that. There was the porn. That's the one I was thinking of. The underwriters, like... the underwriter, they have to check the documents that are unfiled as well because if anything's in there, even if we move it to a different folder, the underwriters have to make sure that nothing's being hidden. So, we had one file where the title was really close to pay stubs, and, um... We did "Ultimate" it, we removed that, ultimately. We did find out after it had gone about seven layers. So, yeah, you know, and look, if you upload something, it happens, right? Like, we don't judge you. We just thought the whole thing was really more hysterical than anything else. Um, but also, at the same point, now that I've laughed at it, please do not upload a ton of inappropriate images because, you know, it's just too much sometimes.
Jennifer: "Okay, guys, any tips for like the fully under... in pre-approval? Right now, I think it's a great time because it's slower. I think it's going to get busier as we get into spring. I feel like people should be getting, you know, if they want to shop in Spring, start getting approved in January or February. Definitely."
Sam: "Honestly, I would just get my application out there, just be...to like, assuming that the timeline is right, you know, if I was looking to buy in the next couple of months here. I would just submit an application so that I could talk to somebody and really dive into any questions I have about my own personal scenario. I would think about what I'm looking for finance-wise, like, uh, monthly payment, what am I comfortable with, and then just focus on knowing that I have everything 100% in place. I'm a big planner. I don't like unknowns or 'what-ifs.' I like very risk-averse, so I would just want to get everything kind of dealt with very proactively."
Jen: "Agree, agree. Start early. Like I said, we do that soft credit pull, so you know, we're not dinging your credit to give you the information. It's free, you guys. We do a hard credit pull at some point, yes, when you go to...not initially, yeah, when you go to underwriting. If you go to underwriting for that full credit approval, we do have to do a hard pull because at that point...and also, you can't close a loan on a soft pull, like, and you wouldn't want to anyways, you know. Gotta have all the information. But yes, if you just want to see where you're at, like Sam said, she's a planner. Most people I find are like that, especially with something that's this big of a transaction. You just want...I get on the phone with a lot of people, and they say, 'I don't know my timeframe yet because I don't know what you're going to tell me. Can I do it in three months, or do I have to wait a year?' So having that initial conversation and not dinging your credit to do that, and then you decide to wait, then you just move on. We don't have to pull the credit. If you're in a good spot and we can fully underwrite you, and you're ready, we'll do the hard pull, get that full underwrite done, and get you out shopping."
Jennifer: "Right, and then, what if I want to upload my documents once every three hours, and I'm going to text you each time I upload a document. Do...are you cool with that?"
Jen: "Please don't. Just upload everything. If you have any questions on what we need, uh, PDF format. The system won't take pictures. Bank statements have to be in one PDF, not one page at a time. We can't string them together. Just call us, ask us if you have questions. Just ask any of us."
Jennifer: "And then, I would suggest once you guys upload all the documents, shoot Jen or Sam an email and just say, 'Hey, I uploaded everything,' because we get notifications, but we get so many notifications that they all go into files. So once you've uploaded the requested needs list, no one will be mad if you text or call or email then, just to let us know so that we can put it, you know, to start reviewing. And we check. If you forget, don't worry, Jolene and Missy comb through those files every morning to see if anyone put in documents. But, um, if I was going through this process, I would definitely reach out to one of you, not to be like, 'Did you look at it?' I would be like, 'Hey, everything's up. You know, when you're ready for the next steps, I'm here.' That's it."
Jennifer: "So, okay, guys, uh, thank you for, uh, stopping by. Uh, Sam, thank you for visiting us from space. The Wi-Fi...the Wi-Fi is amazing there. Jen, your Christmas tree looks great. And I am gonna let you guys go back to all the joy, as am I. But thank you for coming by, guys. Thank you."