As mortgage guidelines and the home buying process continue to become more complicated, it is crucial that you as a Realtor partner up with a trusted lender. Here are a few new ideas and a few “reminders” on how to work together to ensure a smooth transaction.
1. PRE-APPROVAL. Do not leave home without it! If you do not recognize the name of the lender or there is not adequate information on it, require a second opinion from someone you trust. Consequences are severe if you are not confident such as a loss of your commission check; potential loss of earnest money for your client; expenses incurred and time off market for the seller to name just a few.
2. Stay within the parameters of the preapproval. Don’t make assumptions that parents will chip in, gift money may be available or that they can afford more and should buy bigger/better. Those conversations should have already taken place between the loan officer and the buyer.
3. Verify before writing the contract that mortgage contingency dates and closing dates are realistic. Dates too far out may require higher interest rates and expired documents. Too early of a contingency date may require numerous extension requests, irritating all parties and leaving buyers open to renegotiations. There are a lot of moving parts to an “unconditional” loan approval that requires cooperation from title companies, attorneys, asset holders, appraisers, employers, IRS, etc.
4. Provide a fully executed purchase agreement with all disclosures and a copy of the MLS printout. (The printout has type of dwelling, tax id numbers, and a wealth of information needed). Fill in and provide all parties to the transaction and their contact information, Including attorneys, realtors, and management associations.
5. Personal property included with the sale of the home: DO NOT WRITE IN ANYTHING. The investor will not finance a pool table or bar stools. The appraiser must assign a value to these items and deduct from the purchase price if left on or underwriter will require all to be removed, necessitating new initials.
6. Cash the earnest money check! Should that need to be written? If there are inspection issues and agreement can not be reached, the selling side will return the money. The lender needs to verify the earnest money coming out of the account. We collect bank statements up front and address any issues or concerns such as large deposits. If the earnest money is held, it will require additional bank statements with the potential for more issues much closer to closing.
7. Notify the lender immediately of any agreed upon seller credits. This may affect the minimum borrower contribution to the transaction and regardless will need to be sent back to the underwriter and appraiser to be noted on his report. Ultimately this can delay closing by several days due to new legislation that requires mandatory wait periods after appraisal delivery.
The lender/realtor partnerships that work cohesively are the ones that experience the successful closings. Some of these items may seem like normal operating processes but all recommendations are based on my personal experiences. This business is complicated enough! Let’s play on the same team.
