Ask a Banker – Why does it take so long to process a loan?

Oh boy. I knew that question was coming!

Well, I could give you a bankerly answer, about all of the complexities of processing and approving a loan, but let’s cut right to the chase:

One of the major impediments to getting to a quick closing is getting an appraisal done. This is because a function that is actually based pretty much on common sense, has become a rather complex process. An evaluation of an average single family residence or condo runs to several pages of analysis.

Residential appraisals are based on current market value. The property being appraised is compared to other recent sales of, ideally, similar homes. But no two properties are exactly alike, so the appraiser must adjust for the differences, superior or inferior, in the appraised property and the selected comparables.

If recent sales are significantly different from the subject, then those adjustments can represent some pretty big dollar amounts. If the percentage of those amounts are high enough then the entire appraisal document can be called into question by reviewers, including bank examiners.

Appraisers have a lot of liability, so, needless to say, they take time to make sure they’re as right as they can be.

The process is even more difficult in mountain resort markets, such as Grand County. Recent sales can be scarce, and properties vastly different.

Private mortgage lenders, as opposed to banks and mortgage companies, often don’t require appraisals, because they know the markets where they loan money, and they know property values.

So do small banks. Nobody knows it’s real estate market better than the home town bank, and Grand Mountain Bank is no exception. That’s why we at GMB have created our Mountain Mortgage Express residential mortgage program. Re-enter common sense: for loans that qualify for this program, we dispense with third-party appraisals, and do our own internal valuation, based on what we know about Grand County real estate.

There is a variety of moving parts in creating a real estate loan. At Grand Mountain, we’re doing our best to delete the details.