Buyers: why I care about your loan pre-approval Part 1

One of the first steps in a shopping for a home is for buyers to get pre-approved for a loan.  This pre-approval starts the lending process, lets the buyer know how much they can afford and helps buyers decide about the price range in which they want to shop. Make note, many buyers are pre-approved for more than they are comfortable spending.  Often buyers, once they get a pre-approval, figure they'll actually shop for a loan and commit to a lender once they find a house, using the first pre-approval to submit with an offer.

Ack!  Equipped with that pre-approval letter, we, as buyers' agents, write an offer to purchase based on that pre-approval.   In the offer, it states the buyer will get financing, and if there are changes ; new lender or switching to a different program, the seller must be told promptly. In certain cases, the seller must agree to the changes (to a new loan program).  In any case, failure to tell the seller of the change can be seen as a breach of the contract, which could in turn lose the buyer the house and their earnest money.  It really does matter and I really do care.

New, stringent loan processes make a 30 day close difficult.  Part of the purpose of the pre-approval is,  the loan process is actually started BEFORE the offer is accepted.  Credit reports are run, employment  verified, assets and liabilities verified.

Changing lenders after the offer is accepted makes for a longer closing, makes the buyer look flakey for not having completed their research before making an offer, and can look as though the buyers agent is not doing a good job of managing the transaction.

So, dear buyers, the time to shop around is BEFORE you make an offer. If I seem less than thrilled when you switch lenders part way through a transaction without asking me, its because you have just jeopardized your ability to buy the house.

I care where you get your loan because the success of your purchase, which is seen as my responsibility, rests largely on your lender.  Many real estate companies, RE/MAX equity group included, have in house lenders.  This is not some nefarious scheme to somehow trick you, and my commission on your purchase is the same no matter what lender you use.  But, I know how our in house lender works.  I know when a pre-approval letter is written that the file has actually been through underwriting.  That pre-approval letter you get after talking on the phone to a lender, and submitting zero paperwork,  has definitely not been through underwriting and isn't worth the email it is sent in.  I know the rhythm of our in house lender's loan processing and best of all, if push comes to shove, we may have the ability to get certain conditions waived, or fulfilled in a more expedient way.

There are several lenders in town, either in house lenders in other companies, or merely reputable lenders who do a high quality of business, with whom I am happy to work, know they'll do a good job and have confidence in the process.  If it feels like I'm steering you to certain lenders, its because I am.  No, all lenders are not the same.  The  benefits I get when you work with a lender I suggest are same benefits you enjoy; a smooth escrow period and  the successful purchase of your new home.

I maintain a list of several lenders in the area with whom I have had successful transactions.  I'm more than glad to provide this list to you before you start shopping.  Just ask :)

In the next post, I'll tell a few stories of lenders and transactions gone bad.