May your loan be a FHA mortgage or a Conventional mortgage, I am finding many loan officers not prepping their clients with knowledge. I have been in the mortgage industry for over 15 1/2 years now and for some reason it seems like it has been sloppier on the loan officers side of things when speaking to the consumer.
CONSUMER ..... please pay attention to some of my concerns, it might save you headaches and heartache in the future.
# 1 concern...... When you are pre-qualified or approved by a lender, don't go out and buy anything new. The loan officer should explain this to you, but many don't. I just had a client that left their previous lender because it was like pulling teeth when they wanted answers. They are suppose to close on their loan in 2 weeks. But wait, they just bought 2 brand new cars last month and now their back end qualifying ratio is 20% higher. I can't help them now. Their only hope is with the previous lender.
Another lesson to learn? If you have been qualified by a lender and they tell you that you need more credit in order to buy, be careful in what you do. I had a buyer 3 months ago, who the previous lender told them to go out and get new credit. They went and bought a new car. By doing this, it hurt their qualifying ratios and they could buy the house that they wanted. And think about this, common sense.... even if you have new credit, 1 month old, this will not be a positive for you. By all lenders standards, you need to show usually a 12 month payment history to count that positive credit.
Another lesson to learn? The run around theory. I am hearing more and more consumers complain because they would get qualified by a specific lender who seemed very responsive leading up to the application. Once the application was taken, it seems like pulling teeth to get phone calls returned. If it's not easy to get a hold of your loan officer, this might be a reason to be concerned. If they can't give you answers to your questions, and it takes over 2 days, another reason to be concerned.
Overall, if you have a bad gut feeling or something doesn't seem right, don't be afraid to seek help from another lender. At least call a few more up and ask your questions. A lot of this information can even be found online now also. Lastly, I was just told by another consumer in California who has been shopping lenders, that many of them don't know anything about FHA mortgages. This is extremely important because the average consumer is better off with a FHA mortgage. This statement is true if you are putting less than 10% down and if your credit scores are less than 680. Just keep this in mind when shopping for your lender and what loan they place you in. A true mortgage professional is not always as easy to find as it sometimes may appear. Anyone can make promises, but can they deliver?
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
MARC..... yes and no... good point, BUT>...... here is my stance on this and I will be writing about this tomorrow in another post. I still put this responsibility on the Loan Officer. Sure, does it help when a realtor remind the consumer what to do and what not do to. But one problem here is that they might get information from the realtor that is partially correct. I truly think, to many people giving advice can sometimes confuse the buyer also. Then it could come down to pointing the fingers.
Now, this is just my opinion. I know you were a loan officer also at one point.... but I want to stick with the basics. The blame here is with the lender and the loan officer. I am going to be very critical on this, because it's our job. Should I tell a seller how to list their home? That they should always add 5% onto their sales price? Should I tell a buyer that a realtor should not be showing their own homes, their inventory, when it could be the best one out there? These might be poor examples.....
In any case, thanks for your feedback....
Jeff,
Verty Good!
I also agree with Marc, don't buy a car, don't even test drive one! It varies from state to state, but when the dealer ask to copy your drivers license "for Insurance" before the test drive they often decoded it and check your credit. Look at but don't let stores check your credit. Each inquire reduces your FICO score. Don't get pre-approved at the gas company. Don't get new cell phone accounts! Anything where they check your credit.
Consumes don't know that most lenders will check your credit one last time after closing, but before funding the loan. If the borrower's score has dropped below the minimum or it looks like they have acquired additional debt the lender may refuse to fund the loan.
Simply put, don't price or buy anything until the mortgage is recorded!
Yes, Marc the REALTOR should advise the client, but we can't shrug our responsibility by assuming they took care of it. We in finance should, hopefuly proivided a reduntant message!
Bill
Hi Jeff - I tell all my buyers to refrain from buying anything new. I know many times they're all excited about their soon-to-be new home, and sometimes all they want to do is go out and charge a house-full of new furniture, but I do stress the importance of doing nothing at all that will change their financial picture. At least not until after the closing!!
Ann
Jeff - On the FHA bit, both you and I have probably been aware of the FHA transition since last February. With recent MI changes and credit score changes on FNMA and FHLMC, the break-even is now at 20% instead of 10%. I'm sure that most people that are buying homes in your market are putting less than 10% down. I didn't realize this myself until the 3rd of this month but I had a 750+ fico score borrower buying with 20% down. Conventional barely beat FHA.
If you're old school like myself, we use the 10% down thing because of MI. Now, with the score changes and MI changes, coupled with the fact that RARELY does anyone put 15% down, you wouldn't know that things have changed so dramatically unless you had a unique (20% down conventional) client like mine.
I post this comment out of respect and I continue to refer people to you. I just want to further your argument that FHA is "hands-down" the way to go.
Consumers: If you live in Jeff's licensed territories, and someone told you about doing a conventional loan, get a second opinion from Jeff! It wouldn't hurt to have a professional second opinion.