By Brooke Tanner
Picture this. You are one week away from the closing table, and your first-time homebuyer’s lender calls with stressful and unfortunate news. The underwriting team has finished their final review and discovered that your buyer is no longer qualified to purchase the home. This can happen for several reasons. Maybe they do not have enough funds for the down payment. Maybe they made a new purchase and their debt to income ratio is too high. Or maybe the underwriter feels that their income and credit score isn’t high enough.
These are all situations that have happened to many real estate agents, buyers, and sellers time and time again. The thing is, it can all be avoided if you do your homework, and here is how.
Meet with Lenders in Your Area
Most lenders ultimately have the same goals as you. They want to secure as many leads as possible and have smooth transactions that end at the closing table. They want upfront, timely and transparent communication. So, take the time to get out there and meet with them, discuss their goals and how they work. Ask them for references if you feel that is necessary. You want to make sure that your clients can give you good referrals and have a pleasant experience. Please do your homework and make sure you’re putting them in good hands.
Choose Lenders That Have Options
There isn’t one loan that fits all. Different types of loans work for different people. The important thing is to find a lender for your team that will offer these various options to your buyer’s no matter the commission they receive. After the lender looks at your client’s credit and income history, they should offer the best available loan for them. Rural Development, Conventional, VA, FHA, First Time Home Buyer. There are many options. Some offer rebates or can waive fees or appraisals as well. These types of benefits can save your client money!
Ensure Your Lender Does a Credit Approval for Your Clients
Often, lenders do a pre-qualification that is strictly based on the information that the client gives the lender. Frequently, financial information may be left out, which ultimately plays a large factor in your client’s debt to income ratio. When this happens, the lender will give an approved amount, and then you begin shopping. Then your client has an accepted offer on their forever home. Once this happens, they fill out the mortgage application providing more details, only to find out that the pre-qualified amount should have been less, or more in some cases.
Find a lender that will do the extra work in the beginning and credit or pre-approve your client. Doing this makes everything more definite in the process as their creditworthiness is evaluated. The approval letter gives your client the advantage by making the offer stronger. It allows your client to get a better idea of the interest rate they can get locked in and takes them one step further to the closing table.
Choose a Lender with a Proven Track History
How long will it take your lender to get from the mortgage application to the closing table? Does your lender effectively communicate on the various stages of the loan? Does your lender answer your calls or return calls promptly? These are just a few of the questions you should find the answers to when searching for a strong lender to add to your team.
Ask your co-workers about their experiences that they have had in the past. When you attend networking events, ask about the different options and marketing materials they have available. Ask your friends and families about experiences that they have had with lenders in the area. All these questions will help you choose the people that you are willing to work with and allow your clients the opportunity to be set up for success.
As a real estate agent, getting your team of recommended professionals together takes time. Through your experience and knowledge that you gain along the way, it will only get better. Doing your best to provide advice and share past experiences with your clients will help them make the right decisions and influence them towards a great home buying experience. That is what it is all about!
Brooke Tanner is a real estate agent at Coldwell Banker Schmidt in West Michigan with over 20 years of customer service experience. She strives to be the best resource and trusted advisor for all buyers and sellers by staying on top of industry changes and trends.