With the tightening of lender guidelines ever since the recession, and with the increase in homebuyers currently in the market for real estate, more and more real estate professionals and homebuyers are finding it challenging to get to the closing table in a timely manner. Here are three of the most common problems faced by homebuyers during the homebuying process, and what agents can do to help their clients avoid them:
1. Change in debt-to-income ratio – Sometimes the lender will qualify a homebuyer up to a specific purchase price. All is well and good. You locate a home for your clients, and you write the offer. Once the offer is accepted, the lender prepares everything for underwriting and, oops…the debt-to-income ratio has changed. Perhaps the buyer has purchased a large item on credit, such as appliances, furniture or a new car, or perhaps the buyer has co-signed on a loan for a relative or friend.
In order to assure that this doesn’t happen to your clients, make sure that the lender has set expectations accordingly. For example, I know of a lender who uses what he calls the “10 Commandments of Lending” with all of his homebuyers. While he may have created the document tongue-in-cheek, he feels that if you present homebuyers with a set of things to avoid when obtaining a loan, you will save yourself a lot of headaches down the road.
2. The lender or appraiser requires repairs – Even if your client is purchasing the home as-is, sometimes the lender will require specific repairs in order to assure that the home they are lending on is not going to cause problems down the road. Often, lenders want to sell their loans to Fannie Mae or Freddie Mac in the secondary market. In order to do so, those homes must meet certain guidelines — even if the client had planned to fix and flip. In order to assure that you don’t get caught chasing your tail at the last minute, communicate clearly with the lender about any potential hot button issues (problems with the roof or pest control) to assure that the selected loan program is suitable for the home your client has selected.
3. Poor communication and general disrespect for deadlines – Time and time again I hear complaints from agents, buyers and sellers that the lender has not met specific guidelines, does not return phone calls and can provide no concrete details about when and if deadlines will be met.
While it may sound foolish, the first and easiest way to avoid this problem is to select a lender that has a history of providing excellent communication with all parties. Second, it is always best to work with a lender that has direct communication with those individuals who underwrite the loans. In this way, even if the news is not favorable, you are dealing with a good communicator who has direct access to decision makers and who can speed things along.
The best way to assure that a loan closes on time is to work with a lender who has a proven track record for success. If your client has a lender of their own, that’s great. But, be sure to have your client cross-qualify with your own lender of choice — not because you want your client to use your lender, but rather because you want to be certain that there are no red flags that could hamper a successful closing on your next transaction.
Copyright 2014 Realuoso
Reprinted with permission