Getting the Scoop on Financing

Reposted from March 16  2006: It’s THAT relevant in this market!

One of the biggest hurdles that many buyers have trouble overcoming involves financing and lenders.

Often, when I ask a buyer if he or she has met with a lender, I get the evasive, “oh I know I’ll have no problem qualifying for a home”. I usually explain that, while I’m sure they’ll have no problem either, it’s the seller who wants to know that they can come up with the funds to buy a house.

So, to clear up a couple of misconceptions:

  • Just having a conversation with a lender doesn’t constitute a pre-approval. Filling out a loan application, turning in W-2s, bank statements, etc. and then getting a firm opinion of the lender’s ability to lend money to you — now that’s a pre-approval I can use!
  • I don’t need to talk to the lender to find out that you were 30 days late on your MasterCard (or any other good gossip). I need to know specifically what kind of financing you’re getting. The contract isn’t enforceable if the financing information is too vague. So the lender is going to instruct me how to structure the contract around whatever type of financing you choose.
  • I also need to find out from the lender how much time he or she needs to do the job. No point in writing an offer to settle in 15 days if it will take the lender 30 days to complete the loan processing.
  • Then there is the intangible thing that most of us REALTORS® have — the radar that tells us if the lender is promising more than he can deliver. The ones that say one thing and then a few minutes later say something opposite. The ones that keep saying “trust me, I can get this loan approved” but are remarkably shy of details. This is when I know that my job just got harder.

Whether I’m working with a buyer or a seller, I really interview the lender. It’s the only way to make sure that we’re not all spinning our wheels.

And it’s definitely one way to get to the settlement table on time.

(c) 2011 Susan Pruden

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