REAL ESTATE
by Jim Coleman, REALTOR®
TEN LOAN APPLICATION ESSENTIALS for BORROWER SUCCESS AND PIECE OF MIND
This week a couple of situations have prompted a little comment on the borrowing process in this economy and upside down market.
It is true that with the foreclosures and mortgage mess we have experienced recently that the rules of the game of lending practices and mortgage matters have changed. However, loans are available. Qualified borrowers have several options. Part of the challenge is finding out and understanding what determines qualification for a loan and how to deal with the process.
One of the scenarios alluded to had to do with the long-standing requirements of both the borrower and the property qualifying. The other situation had to do with a lender telling a borrower that they, the lender, would not provide a lock of the rate until about a week out from the scheduled settlement and closing.
While some guidelines may be appropriate for dealing with this process, it is vital to point out that the rules and stipulations to qualify for a loan and obtaining underwriting approval are set, determined and enforced by the lending entity. (This column has referred in the past to the Golden Rule; those who have the gold, rule.) But the borrower needs to remember that there are multiple sources or options for the source of the loan.
The following items seem important in working through this process and the procedure must be reviewed in light of the urgency and motivation of the borrower in accordance with the stipulated deadlines of a purchase contract, if applicable, and the time lines specified by the lender.
1. Seek thoughtful counsel from a competent buyer's representative in the case of a purchase loan when a buyer's agent is involved.
2. Be certain of critical deadlines which affect timely performance of any applicable contract and the schedule provided by and committed to by the lender, understanding that the lender is a third party to an agreement between buyer and seller and not bound by the time deadlines of the agreement between the principles, unless the lender expressly commits to the borrower applicant.
3. Be sure there is a personality match with the selected loan processor taking the application and there is comfort and compatibility in the information giving and sharing process.
4. Understand the lender's procedure of passing the file along to other processors and closing representatives.
5. Identify precisely the requirements imposed by the lender and the forms essential for the application package.
6. Be certain to obtain a written "Good Faith Estimate" from the lender specifying costs and fees associated with the making of the loan.
7. Find out the physical location of and the means for communication with the representatives and agents of the lender. This is vital. There is more uncertainty than one would want even in the best of conditions without everything going off into the proverbial "black hole" and not knowing what is going on and not being able to communicate with anyone for input, assurance or progress of the processing.
8. Make certain at the outset that the specifics of the desired loan fit well with your loan needs. Do not let the lender "sell" you on a specific type of loan just because it may be a more profitable one for the lender and not have it serve your purposes and needs.
9. Remember loan companies are competing and trying to entice you with their offering. Be wise and be sure the loan is one you can afford. Be sure you understand the payment process and procedure and whether or not there are escalation clauses and alterations of the payment amounts.
10. Make certain your choice of lender and loan company is based on sound business relationship principles for obtaining the right loan for you and not just because of a friend or acquaintance, though this can be one of the strongest protections to you in many situations, and not because of an advertisement or commercial enticement.
In this dynamic changed world of business and finance, it is extremely difficult for even the most informed and knowledgeable borrower to anticipate and handle every step in the process. Moreover, in fairness to the lending industry, it is often difficult for the hard working, honest loan providers to anticipate changes by the regulatory agencies and those driven by consumer supply and demand. But the matters mentioned above should be automatic as minimum concerns or safeguards to a smooth, successful loan experience.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated. He Specializes in Residential, Investment and Commercial Real Estate, holding National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), Resort and Second Home Property Specialist (RSPS) and Seniors Real Estate Specialist (SRES). You can contact him by e-mail at Jim@RealtorJimC.com. Call: (435) 674-0600; or write: Jim Coleman, 201 East St. George Boulevard, St. George, Utah 84770. This and other columns are available at www.RealtorJimC.com/articles.