Pay Attention To Your Barrington Home Loan Approvals
You are in the market to buy a new home, now that's exciting! If you need finance this is the first step but one I fear that many buyers do not pay enough attention to.
No matter who you decide to approach it is not just a matter of providing the paperwork, getting your approval and going house hunting. On the surface that is what happens but I would like my buyers to learn more about their approval and this was high-lit ed just last month.
A buyer of mine decided to use a loan officer they had been introduced to by an agent they had fired. I did not know the loan officer so had no experience with them. I had suggested a loan officer I use-Steve Smither-but they stayed with the other guy. When we found the home of their dreams and had a contract accepted my buyers applied for their loan and after a longer than average approval time, they were given the clear to close.
What is a Clear To Close? Simply it means the lender has everything they need to be able to issue the funds on closing day. It's as near as you can get to having the money placed in your hand!
For my buyers it was a little late but we had plenty of time because our closing was still 4 weeks ahead. Then the bomb drops. They are suddenly told that if they don't close by a date in about 10 days time there is going to be a daily fee and if they stick to the original closing date this will add up to $1500. The reason given is that the rate was locked for 30 days and they would now be beyond that 30 day limit. To keep the rate they had to pay to keep it locked.
Now the ridiculous part is that rates had come down and one might asked why they could not renegotiate the rate. Whilst I understand why this is not the point of this post. The point is did the buyers fully understand what they were doing when they decided to lock the rate in for 30 days, knowing that their closing was almost 60 days away. I don't know because I was not a party to any of the conversations-I was kept out.
It is not my business to be involved with the loan officer's and buyers decisions in relation to the loan, I am not a licensed loan officer, but when my buyers use my loan officer recommendations, those loan officers keep me fully apprised of progress, although not necessarily the details of the loan and terms. The question is now what are my buyers going to do? They are clearly very unhappy at this turn of events. So much so they call me.
I call my loan officer-Steve Smither-to see if I can get a better understanding of what is going on. When my buyers call me it all comes out jumbled so I rely on my loan experts to un-jumble it and explain. Steve works for Ardain Mortgage in Palatine with Rich Hartian who is the Broker and Owner. They make an offer to my buyers. With just under 4 weeks to go they can do my buyers loan at a better rate, less closing costs. It will be really tight but my buyers are relieved. There is no guarantee that my loan officer can get this done in time and closing cannot be delayed even one day. So there is more than a little risk here.
In the end the loan comes through and my buyers close on time. The questions that arise are these?
- Did the buyer fully understand the loan process-was it even explained?
- Did the buyer understand what locking his rate would mean?
- Did the loan officer fully explain the rate lock-knowing at the beginning they were not closing for nearly 60 days?
- Given this scenario should the rate lock scenarios and choices be in writing and signed by the applicant-I certainly think so.
- Could the loan officer renegotiate the rate?
- Did the buyer make a decision with full understanding or did he forget?
- What would the buyers have done had they not been able to get a different loan?
You will find that most buyers agents have loan officers they work with and trust. When we work with the same loan officers we have a good rapport built and can openly communicate. The original loan officer in this case never called me-not once. He never answered my voice mails and his assistant responded to only one of my emails. The attorney also had similar communication problems.
When applying for your mortgage loan, please pay close attention to the entire process. If you do not understand something ask for an explanation. If you are not sure about what you are being told, call your attorney. Sometimes a different explanation makes it more clear. Do not sign anything until you are 100% happy. If you get a bad feeling, change loan officers at the start not at the end-it can be extremely risky to do what my buyers did.
I always recommend buyers interview Realtors-interview Loan Officers as well.
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Copyright 2010 Corinne Guest All Rights Reserved - * Pay Attention To Your Barrington Home Loan Approvals *
Corinne: All your questions are very valid. As a lender, I sometimes wonder about a few of them myself. I sometimes also question if buyers not their agreement or agree with you when they truly do not understand or are confused. As far as the re-negotiation of a rate, the lender (depending on their particular company's rules or agreements) may personally be taking a "hit" for doing that ... so was unwilling or incapable of asking on a client's behalf. A very questionable decision, but it may be the case.
As you point out, it's exactly why taking the time, doing the homework, and making the best decision regarding a loan officer is so important ... not only for the client, but everyone involved in the transaction. I have no problem being a 2nd choice or relief pitcher in a deal ... just as your lender of choice was in this. You do so with the hopes that you can earn a trusted status ... and also prove your worthiness to your best referral partners. Your lender is lucky, Corinne. He certainly has that in spades ...
Glad the closing ended in success ...
Gene