Reason #55 Why Using the Right Lender is So Important

There are many reasons why using the right lender/loan officer is important. Let me rephrase that…VERY IMPORTANT! And here is reason #55…

This comes from Allison, a home buyer in Fairfax who posted the following questions on Trulia Q&A (note: I’m not her buyer’s agent nor involved in her transaction whatsoever),

[My] lender overlooked the appraisal/financing contingencies. Closing is in a week and no appraisal yet. Seller hasn’t walked but what recourse do [I have]. I have the lender admitting in an email that no one knew there were contingencies even though the contract quite clearly stated this. My realtor, mortgage broker, and I were all told different dates for when the appraisal would be done by over the last few weeks. The seller hasn’t voided the contract yet but wants this resolved ASAP (as do we all). With only a week left, there’s not much I can do except wait but I don’t think the appraisal was even done until today (if I can believe the lender, and I don’t know if I do at this point). I have a settlement attorney and plan to speak with him about the situation but is there anything that can be done? Even if the deal goes through, I plan to address this with the company (much of this has been documented on email, although of course the loan officer is difficult to contact). I’m not blaming the appraiser at this point until/if I get more information.

This is a crappy situation to be in. Should the lender drag their feet any longer, the outcome could be that Allison (or you if you’re in this situation) loses out on her home as well as the money and time she’s already invested in the moving process. And what if she/you were timing the purchase of your new home with the sale of your current home?!

The truth is that, as the buyer, you are at the mercy of the lender you choose and you often have less control over their actions (or lack thereof) than you may think. If the lender makes a mistake or drags their feet, you may have recourse. But recourse often comes after the damage has already been done which is too late. And recourse has little to do with control.

In case the previous paragraph made you tense up and say, “WHAT?!” or “You’re crazy!”, I’m sorry to disappoint. But that’s the hard truth about real estate. If it makes you feel any better, you’re not alone – almost everyone involved in the transaction including your buyer’s agent, the seller, the listing agent and the title company are at the mercy of the lender. As James A. Garfield once said, “He who controls the money supply of a nation controls the nation.”

Enough of the bad news…let’s get to the good news.

There are ways to avoid getting yourself in the situation in the first place. It requires some legwork, time out of your day and trust, but it’s well worth the investment.

• Ask friends, family, coworkers about their personal experience with the loan officer(s) they’ve worked with in their real estate dealings
• Check the loan officer’s references. It’s not just about price as is shown in Allison’s example
• Ask your real estate agent for recommendations on loan officers
• Make sure your loan officer works for a direct lender, not a mortgage broker
• Don’t just rest on a company name. It doesn’t come down to the company/lending institution, it comes down to the individual loan officer. Just like you may get bad service from one waiter and great service from another waiter at the same restaurant, the level of service you receive depends on the individual loan officer rather than the company they work for.
• Though credit unions are often thought of as having very competitive rates and being good to their members, the complete opposite is often true (trust me, I’ve dealt with 99% of credit unions and can give you story after story)
• Make sure that the loan officer is giving you options, recommending loan types that are suited best for you rather than just the one you want/heard was the best and that they back up their claims with hard facts and numbers. The lender I work closely with and trust implicitly once said, “If you think you need your appendix removed, I would hope that the doctor you went to would check out your appendix and overall body and health prior to removing it just because you thought you needed your appendix removed.”
• Get more than one quote. Talk to 2 or 3 different loan officers. Ask them for an estimate of closing costs and interest rate and compare them to each other. But don’t forget to check their references and remember that it’s not just about price.

All of these are important, but a very important one that is often overlooked or not given enough weight is getting recommendations from your real estate agent. And here’s why…

You’re just another customer to “XYZ” bank and “Joe Smith loan officer” – you may or may not ever work with “Joe Smith” ever again and the loan officer knows that you’ll probably forget their name within a month after the deal closes. They do not have as much incentive to treat you right and go above and beyond as they do with someone they know is a repeat customer.

That’s where your real estate agent comes in… A real estate agent who refers borrower after borrower is worth gold to the loan officer. This is especially true in this market where most loan officers are closing fewer deals and making less per deal than ever before. When it comes to clients who the agent refers, the loan officer will bend over backwards and put out fires faster than you can dial “911″.  They will go to such lengths to provide stellar service because the loan officer knows that if they screw up, the agent will no longer refer them anyone and a potentially large chunk of their income will vanish.

I can honestly and proudly say that not one buyer that has worked with the lender I recommend has every been in Allison’s position. Nor have they been anywhere near such a position. This is the power of long term and ongoing relationships with competent, experienced and honest people and vendors.

Some of you may not believe me and will insist on using a loan officer of your choice despite not heeding the warnings nor following sound advice. I sincerely hope things work out for you and that you don’t end up in Allison’s position or another one equally if not more severe.

To those who do their due diligence and trust those who are honest and have lots of experience in the field of real estate and financing, you will find yourself having no such story to tell as the one at the beginning of this post. And that’s worth gold in itself.

First Time Home Buyer Federal Tax Credit Extended…and Expanded

The government has extended the first-time home buyer federal tax credit as well as expanded to include many existing home owners. First-time home buyers now have until April 30, 2010 to sign a contract and qualify for a tax credit up to $8,000. And starting November 7, many existing home owners may qualify for a tax credit of up to $6,500.

For more information, check out this flyer provided by the Virginia Association of REALTORS(R):

Information on extended and expanded first time home buyer federal tax credit –

You can also get more information on the extended first-time home buyer tax credit by clicking here.

How The First-Time Home Buyer Federal Tax Credit Works

Bob and Sally show us how the first-time home buyer federal tax credit works (click here if you can’t see the video below)…

Hat tip to NRVLiving.com and NVAR.com

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Time’s a Tickin’ On the First-Time Home Buyer Federal Tax Credit

Time’s a Tickin’ on the First-Time Home Buyer Federal Tax Credit

If you would like to take advantage of the first-time home buyer Federal tax credit, you’ll need to act soon because time is running out. The tax credit expires December 1, 2009, which means that you have to settle on your new home no later than November 30, 2009.

What does this mean practically speaking?

Despite November 30 being the deadline, you should aim to settle by November 15th to help leave room for any delays on your or the sellers’ end. Also, settlement companies will be swamped with settlements the last two weeks of November and may be delayed themselves. And don’t forget that the Thanksgiving holiday takes away at least one, if not two business days at the end of November.

At this point, short-sales are pretty much out of the picture as far as settling in time to take advantage of the first-time home buyer federal tax credit. It takes an average of 90 days to get a response from a bank(s) on short-sale approval and then you will need another 3 to 4 weeks after that to settle. This puts you way past the November 30 deadline.

If you are a home buyer going after a traditional resale or foreclosure, you should ratify a contract no later than about October 1 to 15 depending on the type of financing (conventional vs FHA vs VA). Conventional financing takes about 30 days from date of ratification to process and fun. FHA financing takes 30 to 45 days. VA financing takes closer to 45 days. (These are general numbers – the lenders I work with closely are awesome and get everything done within 30 days no matter what type of financing you go with)

If you are a home buyer who wants to take advantage of the first-time home buyer federal tax credit, you need to start actively searching for a property to purchase immediately. This will give you about a month to search for a property, submit and ratify an offer with enough time to settle before the deadline.

Wondering how to get started in home buying process?

First - click here to read my post, “The Home Buying Timeline”

Second – Click here to contact me so we can chat more about your specific situation and see what’s best for you.

Related Articles

“Move fast to take advantage of first-time homebuyer federal tax credit” – Washington, DC Examiner

Information on first-time home buyer federal tax credit from the Internal Revenue Service (IRS)

When Does the $8000 First Time Home Buyer Credit Expire?

You’ve probably heard about the $8000 first time home buyer credit (click here if you haven’t or would like more information about it). But do you know exactly how long you have before it expires?

IMPORTANT: This is how long you have until it expires, but you must settle/close on the purchase of your home by this date. That means you should be starting your home search in the near future especially if you’re considering purchasing a short-sale property (click here to find out how much time each type of transaction takes to close).

H/T to Ken Brand for sharing about the widget

HUD Approves First Time Homebuyers, Lenders Using Tax Credit as Down Payment

Looks like I spoke too soon… HUD has approved first time home buyers and lenders (mortgagees) using the up-to-$8000 first time home buyer tax credit as a down payment, to pay closing costs and/or buy down the interest rate. The official HUD letter with guidelines was released yesterday. Here it is (if you can’t see the document, click here)…

HUD Letter to Mortgagees: Instructions on how to use First Time Home Buyer Tax Credit –

The next step is for banks/lenders to come up with a system internally that will allow them to offer this to borrowers. This could take a few days to a several weeks. Check with your lender to see if/when they have a system in place for you to take advantage of this program.

P.S. This “use your tax credit as a down payment” program is set to expire this November. The up-to-$8000 first time home buyer tax credit as a whole is set to expire December 1, 2009.

Hat tip to Dulles Association of Realtors (DAAR) for breaking the story.

What’s Up With the $8K Homebuyer Tax Credit Being “Monetized”?

On May13, HUD Secretary Shaun Donovan said that the Federal Housing Administration (FHA) is going to permit its lenders to allow first time home buyers to use the $8000 tax credit as a down payment (aka “monetize” the tax credit).

The next day, May 14, the Office of Management & Budget told the FHA to hold off on implementing the program because it was only a “proposal” (aka “sike!”).

Since then, consumers, agents, lenders and others have been waiting (impatiently) for a final and real answer to if/when the first time home buyer tax credit will be “monetized”.

Well, here’s the latest. According to an article in the Wall Street Journal,

“The FHA says that the rumors about the program’s demise were flat-out wrong and that the program will be rolled out soon. Some industry analysts say that the memo may have been pulled because the program, which uses a tax credit established in February’s stimulus package, needed an OK from the White House budget office.”

If the program is approved, it would only be available through November of this year so time is a ticking…

I’ll keep you posted as more becomes available.