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What Real Estate Agents Should Know About Financing to Help Ensure a Smooth TransactionIn order to be “in the know” about what is happening with the financing for the home you have under contract, you should ask the lender involved the following questions: Is the buyer prequalified or preapproved?
In this market, investing in a client that is merely prequalified is gambling with your most precious asset—your time. Prequalified is based on verbal information only! Nothing has been verified (e.g. paystubs, w2s, tax returns) and in some cases credit has not even been refer-enced. This may be acceptable when determining if you should put someone in your car for the first time; however, beyond that you are no longer working smart. A preapproved client is concrete. Your client’s credit has been pulled from all three bureaus, a full application has been completed, all documentation has been collected and verified, the loan has been submitted through an underwriting system and an approval has been received. From which underwriting system did you receive your approval?
Expect that your lender will need more time to do the necessary upfront work to ensure a smooth transaction. This will save a lot of headache and wonder down the road for everyone involved. All lenders should be using a Fannie Mae or Freddie Mac underwriting system. You may have heard the lender lingo: DO (Desktop Originator/Fannie Mae system) or LP (Loan Prospector/Freddie Mac system). Which loan program have they been approved? What rate is the client locked?
30 year fixed, 40 year fixed, 3 year ARM, etc. It is important to know that the lender is on top of your file and has locked the interest rate for your clients. When do you expect to submit and have the approval from underwriting?
Make note of these dates so you can call to follow up. Once they have the approval, ask for a copy of this to be faxed to you for your re-cords. When should a final HUD-1 be expected?
Unless there are certain circumstances causing the final HUD-1 to be unavailable until the last minute, you should expect to see this at least 48 hours prior to the closing. Will you review the final HUD-1 with the client before the closing?
To ensure a seamless, fast closing with no surprises, it is necessary the clients are familiar with all final numbers before the day of closing. When will the wire arrive at the title company?
Make sure you and the title person have the contact information for the person sending the wire just in case the wire/lender don’t arrive. Will you be at the closing?
The answer should always be YES. If No, make sure they will at least be available by phone at the time of closing. Additional questions to ask a lender in order to protect your buyers:
Does the loan product have mortgage insurance?
Is there a prepay penalty?
Is this an adjustable or fixed loan? To keep an eye on falling mortgage companies, go to:
Mortgage Investors Implode: http://www.Ml-implode.com giving you up to date information on fallen/falling mortgage companies. Lastly, you want to make sure your lender has all the facts of the transaction. Submit the contract (including all amendments) to your lender as quickly as possible. The majority of lenders never read the contract; it would be valuable for you and the lender together to review all important dates once under contract. » Back to articles |
