Deb Espinoza's Real Estate BLOG

Most buyers know that the new home buying experience needs to start with getting a loan approval letter from a lender. What most buyers don't know, and what some poor quality loan officers don't get into are the details of that approval. As a buyer's agent I have to know how my offer needs to be put together and presented. Here are just some of the items that we must know in order to do our job effectively:

• Does the buyer need seller credit to cover closing costs & how much?
• If the buyer really likes a property and we don't want to muck up the chance for approval with asking for seller credit, what are our options? Can they take a higher rate and get credit back on the loan side and if they do, what would be the approval amount at that higher interest rate?
• Is the buyer using gift funds for down payment and/or closing costs AND has this already been gifted and verified?
• Is the buyer using city or state money for down payment assistance and have they taken the required classes to receive the funds and do they have their eligibility certificate. (yes, there is a CLASS the buyer must take, some are online, and they need to PASS A TEST)
• Do we need longer than a 30 day escrow in order to get down payment assistance funds?
• Does the buyer still have outstanding credit issues that you are taking care of and what is the timing for having this completed?
• Are these buyers on the edge of qualification and is this loan going to take 'extra scrutiny' once it hits the underwriter? In other words, is this loan 'out of the box'? Do we need extra time for closing in order to push this deal through?
• For the Buyer's info: How much will the appraisal be and is it collected up front or rolled into the closing costs.  How much are the 'standard' closing costs for the loan they are approved for?
• If the buyer is looking at condos, how much can the HOA dues be for this loan amount?
• What is the annual homeowner's insurance that the loan was pre-approved at ? If the buyer is looking in a flood zone or high fire hazard area the rates will not be standard and we don't want to get to one day before close to find out that the insurance throws the ratios out of whack and the deal falls through.
• If the buyer is qualified for an FHA loan, do they also qualify for HomePath? or is their score too low?
• Finally- If the buyer does NOT qualify for a mortgage with your company is it because the lender's underwriting standards are tighter than the required terms? For VA buyers especially- the BIG BANKS require higher credit scores and have DTI ratios that other lenders don't have. Buyers and their agents should be working with lenders that use the standard rules for lending, enough with these big banks that took bail out funds and now make tighter standards for the borrower....

Obviously these items won't be put on the approval letter, but perhaps a dedicated, quality loan officer would provide the buyer with an initial information sheet to give to their REALTOR and/or make a phone call to the REALTOR to go over the details of the buyer's qualification.