Over the years I have come to understand how important the wording on a lender pre-approval letter is. With feedback from trusted Realtors, we have included in ours that we underwrite, draw documents, and fund all in house, and that our Certified Pre-Approval means that we have 100% of the documents, and they have been signed off by an underwriter. I feel that a good lender letter, really helps the listing agent advise the sellers as to the strength of the buyer. I have heard in the past, of sellers rejecting offers from buyers who were pre-approved by “online” lenders, and that makes a lot of sense – if something goes wrong the day of closing, there is no one here locally that can help.
I am hearing a new twist on this lately, in fact, I have heard this 3 times this week. Listing agents and sellers are actually turning down offers where the buyers are pre-approved by the two largest banks in America, or countering back that the offer is only accepted if the buyer changes lenders to a local, smaller lender. I thought this was interesting, and not something I have heard in the past. I can tell you, that about 50% of the files that come across my Trauma Center, are loans that were “pre-approved” by these two banks, and now, are having problems closing or just being completely rejected – so I am glad to see that everyone is taking notice. It is easy to say yes upfront in 5 minutes (as some commercials advertise), much harder to make sure when you say yes, the loan is guaranteed to close.
Not surprising, just yesterday I spoke to a client about an upcoming purchase, who said her “biggest goal” for the new financing, was simply to get away from her current bank (one of the two, by the way). Her last refinance took 8 months to close, and was a nightmare. The bank collected an upfront application fee, so the borrower was hooked in. Over those 8 months, her credit was pulled 3 times, because it kept expiring, and she received a new stack of documents to sign every 2 weeks. The whole time she was told that the delay was because the underwriter was “not happy.” When it did close, the notary showed up at her home, and the rate was 0.375% HIGHER than what she had seen all along. I am curious as to how this can happen, when the RESPA rules state that if the fees/rate change, the borrower has to know and re-sign documents, and if not, it is illegal to close. Not sure how the big boys can get away with this, but I had to share.
At Hallmark, we guarantee your approvals upfront, and by taking an extra moment to obtaining our Certified Pre-Approval, your closing will happen on time, under budget, with no surprises!