During the height of the real estate market, most borrowers who applied for a mortgage received one. However, in today’s lending environment, consumers should be more cautious about where they apply for a loan and from which Web sites they receive quotes.
I’m particularly leery of lenders my buyers find online. Generally speaking, these lenders are located outside of the Bay Area and usually even outside of California.
Some of my buyers come to me already pre-qualified with a lender who is out of the area. While I want my clients to get the best deal possible on a loan, I always ask them to also apply with a lender I know who has a solid track record and local reputation. Having a back-up lender safeguards against last minute problems with out-of-state lenders withholding funds at the last minute and jeopardizing the deal.
Examples of snafus that have held up loans in the final hour are: not having enough insurance against the property to make the lender happy, documented evidence of where the funds for the downpayment came from, a pest clearance, and a last minute decision by the lender that the property is in a ‘declining market’ and they can therefore no longer lend against the home.
Red flags also go up when a client tells me about shopping for home loan online. You should always be cautious about sites that request a Social Security number and address upfront before they give you a rate quote. Too many inquiries for your credit report could have a negative impact on your FICO score should you decide not to apply for the mortgage.
It’s important that consumers ensure that all fees are clearly disclosed on a site’s rate quote. Otherwise they may be surprised when receiving the paperwork from the lender.
Borrowers who are unsure of which type of mortgage is best for them and their situation should contact a mortgage broker. Those in the market for a jumbo loan or financing an investment property should especially work with an experienced broker. Lenders for these kinds of properties are very particular and each unique situation requires consideration of a number of factors, which are best weighed by someone who understands the particular requirements of each lender.
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on Monday, July 27th, 2009 at 4:55 pm and is filed under Buying Strategies.
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