What buyers need to know right now about loans: Emphatic tips from a title agent!

From our vantage point, an average of  50% of files cancel due to financing issues. A recent buyer had to go through four properties until one qualified for conventional financing.  These were qualified borrowers with long term employment and large down payments.  But files don’t necessarily have to go that route with some advance inquiry and planning by the borrower.  Borrowers need to be more proactive than ever with their loan process and stay on top of their lender for answers and results on a daily basis.Yep, you read that right on a daily basis.

Here are some tips we feel emphatic about:

Do not apply for your loan through an 1800# or a banking representative at your bank: Neither will likely get your loan closed and they are only “order takers” not mortgage /home loan professionals. No matter how good your relationship is with your bank or how much money you have deposited, it wont make any difference during the loan process. Neither will using a lender you have already had a loan with. They treat every new loan as if though they have never met you and you are a stranger off the street. The only exception to this rule is private banking for high net worth individuals.

Be very wary of online-based lenders such as Quicken loans, Rocket Mortgage etc.: Though they are bonafide, licensed lenders, South Florida is a unique lending market fraught with hurdles for borrowers. They may deny your loan  a few days before closing and many times they will cut off all communication with you after denying your loan. We call this the AWOL loan officer situation , of which we have seen dozens.  This will jeopardize your deposit, waste money on upfront costs and put your deal into a tail spin.

Get estimates from minimum 2-3  mortgage professional recommended by a friend, family member or real estate professional who did a closing with them within the last 1-2 years: Ask them what rate they received and what their closing costs were, to have a point of reference going into the conversation. However, do not let friends, family or a real estate professional cloud your judgment when making this decision. Often, the most demanding, exacting, tough talking loan officers are the only ones who close.

If you are self-employed in any way (Sole Proprietor, a 1099 contractor, own a company but issue W2), you will likely need a mortgage broker/lender, not a conventional bank:   Setting up and vetting a self employed borrower for underwriting in this situation is trickier than a W-2 employee , but someone with experience will know how to get it done.

The new consumer finance laws really benefit borrowers: All lenders must provide borrowers a Closing Disclosure itemizing all loan fees  before proceeding. Any changes to these fees along the way, require a a revised disclosure thus assuring a “no surprise” closing . Insist on written estimates and let them know you are aware of these changes.

Get a Closing Disclosure Estimate from every lender you are considering using: This will enable you to compare apples to apples and this document will be your road map toward the loan closing. See sample Closing Disclosure Estimate

Be aware of what property issues may cause loan or  insurance problems: Property related issues such as  a low appraisal, termites, older roofs,  outdated electrical wiring, rotting wood, illegal additions, lack of storm shutters can cause insurance or lending issues.

If you are buying a condo and plan to put less than 50% down payment:   Inquire in advance with your lender before even making an offer if your condominium building will even qualify for financing. Any qualified loan professional will ask you to get the financial documents before even considering an application. Note that a high ratio of renters to owner occupied units can make financing unlikely.

The best interest rates go to borrowers who do their homework and understand their situation and risk level for a bank:  Know your credit score and have your W2, bank statements and tax returns ready. If self employed, know your rate and closing costs will be a bit higher as you will be perceived as a higher risk.

Johana Wolf, a successful high-production Realtor with Fortune International Realty feels advance planning is crucial:  “Buyers need to get pre-approved before looking at homes and to make sure once they have been approved, that they don’t make any large purchases that might affect their credit scores”, she says. ” Also, properties that don’t fit the zoning laws such a house with two kitchens will cause loan issues. A leaking roof or illegal additions will most likely kill the financing as well. Having a good title agent who will diligently check for liens, code violations and open permits is really important”, she adds.

Questions about your contract or the loan process? Please contact us at 305-271-0100 or [email protected]. Office or video appointments are available.

Disclaimer: The Closing Company, Inc. is not a law firm and is not providing legal or tax advice in this blog.  For legal advice, please consult with a licensed Attorney. For tax advice, consult with a Certified Public Accountant. Hiring an attorney is an important decision which should not be based solely on advertising. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.