Tuesday, July 29, 2014

Q: I’m getting really frustrated with my lender.

She keeps asking for the same paperwork over and over again and won’t take my word for anything. Can you recommend another lender I can work with?

A: One thing you should consider is that because you’re in the middle of a transaction and buying a home, you must seek the seller’s permission to change lenders. Many buyers never remember that part of the financing contingency although it’s important. This is intended to protect the seller for many reasons. So if you change lenders mid-stream, so to speak, we’ll have to get the seller to agree.
More important is the fact that all lenders will be asking you a lot of personal financial questions. They’ve been burned in the past by trusting that the buyer is truthful. They have also been far too sloppy in the past as our recent recession demonstrated. So they want written proof of everything.
In addition, your financial situation must be updated on a regular basis. You may show a large amount of cash down payment in your bank account and then spend it on something else before closing. I’ve actually seen that happen. Or you may have your hours cut at your job and really can no longer qualify for the home loan.
I always recommend that when someone starts looking to buy they get preapproved. That preapproval letter is almost a requirement when making an offer these days. In addition, it gets your financial paperwork together in one place so that you can send it to the lender right away and also update it regularly.
Don’t think of these paperwork requests as mistrust. Think of it as a protection for you and the bank, credit union or mortgage company you choose to work with. You don’t want to bite off more than you can chew in mortgage payments and neither does your lender. I’d be happy to recommend other loan officers to you but I think the one you’re working with is doing a fine job. Try to be patient with the process.

Thursday, July 10, 2014

Q: We just lost out on a home we made an offer on and really wanted and we’re feeling angry.

Some other buyer snuck in while we were making changes to the contract and the sellers took that other offer. Didn’t they have an obligation to finish working with us first?
No. This is one reason I insist that buyers read the purchase and sales agreement and ask questions before making an offer. Any change to the original purchase and sales agreement becomes a counteroffer. I noticed that you wrote in a couple of small changes to the contract after the sellers had sent it back with their acceptance. That meant that you did not have a contract and that gave the sellers the opportunity to accept another offer. If you had left it alone the house would be yours.  It’s really critical, especially in our current fast market, that you read what you sign. In the purchase and sales agreement it specifically states that any change creates a counteroffer. The sad thing in your case is that the changes you made appear to be very minor. Changing your mind about a timeline or any such small change is not worth losing the home you want to buy.  Sellers often have a second offer come in after they have responded to a first offer. In that case it’s even more important to respond quickly and decisively. Let’s say the seller counters your offer with a slightly higher price. You should already have determined, before you made the original offer, what your bottom line price would be. That way you can accept, decline or counter back to them quickly, before another offer comes in that they might prefer. Many people, buyers and sellers, don’t realize that the purchase and sales agreement, and their addenda, become a binding contract as well as instructions to the escrow officer. Writing in small changes on those documents means the other party must initial that change to create a contract. Hopefully you will be better prepared next time you make an offer.