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Think You Might Be A Victim of Lender Bait And Switch? You May Want To Think Again

By
Real Estate Agent with Village Real Estate Services, Inc.

 One of the most often-heard complaints about lenders is "Bait and Switch".  Does it happen?  You bet.  But, I'd being willing to bet it doesn't happen as often as we might think.  The next time someone starts giving a bad rap to a lender for a giving them a surprise at the end of the loan process, you might want to ask them to tell you more. 

In my experience, the lender is not always the culprit.  It can actually be the borrower who causes the loan to change at the last minute.  Here are the three most common mistakes that people make while in the process of getting a loan to purchase a home or condo:

1.         Making a large purchase such as a houseful of furniture or new appliances and running up their credit card balances just before the close of escrow.  This can create a large fluctuation in monthly payment that can seriously affect the borrower's debt to income ratio.   And, if it maxes out credit cards, the FICO scores could drop enough to disqualify the borrower from the loan program they originally qualified for.

2.         Adding a new loan to your credit such as a car loan.  Again, this can cause your lender to have to shop for an entirely new loan program for you because they can no longer justify that your income will suffice for your existing debt and your new home loan.

3.         Either husband or wife decides to quit their job before escrow closes so they'll have time to pack up and move into the new home.  If you're qualifying for a loan based on two incomes, this can make your loan disappear just before closing.  You see, most mortgage companies will make a final phone call to your employers just before they fund your home loan.  So you went through the entire process for nothing and your lender is left to scramble for a new loan for you. 

These are just three classic reasons why the loan you thought you were getting is no longer available to you.  There can be other reasons, too.  Mortgage companies frequently pull loan programs.  So, the program that exists today, may not exist tomorrow.

All of the above reasons are the reason you need to work with a lender you can trust to work for your best interests.  If you need help in finding a lender you can trust with your home or condo financing needs, please give me a call.  As a REALTOR® in Orange County, California it has been my privilege to work with some of the best lenders in the business.  I'd be happy to refer you to a lender who will provide you with excellent service.  Just give me a call. We'll discuss your specific needs and I'll introduce you to just the right person to assist you in getting your home or condo loan.

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Marlene Bridges, REALTOR®  800 777-1775

South Orange County Real Estate Website

Orange County Seniors Lifestyles Blog

SRES - Seniors Real Estate Specialist®

CRS-Certified Residential Specialist®

President - Laguna Hills/Laguna Woods Chamber of Commerce

Marlene is a highly experienced  South Orange County CA REALTOR® specializing in residential Real Estate and the sale of Homes and Condos in South Orange County, California and Saddleback Valley cities of: Laguna Woods, Laguna Hills, Laguna Niguel, Laguna Beach, Rancho Santa Margarita, Lake Forest, Dana Point, San Juan Capistrano, San Clemente, Aliso Viejo, Mission Viejo.   

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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Marlene - Oh boy, you hit the nail on the head with these.  That said, it's our job to make sure we tell them & remind them not to apply for additional credit, quit their job, etc.....but that doesn't mean people always listen.  It's refreshing to see that you understand this totally and are reminding the public of this. 
Feb 08, 2008 08:23 AM
Jimmy McCall
JimmyMcCall.com - Cunningham, TN
The Ex-Mortgage Consultant

Marlene,

An underwriter has a role in changing the program also.   I had a stated income loan not accepted because in the contract the buyer in an effort of full discloser state he was a licensed Realtor in Oregon and Arizona even though that was not his current career.  The underwriter kicked it out (you know how tough underwriters are on Realtors).  Who do you think took the blame?  Thanks for reminding people it is not always in the originator's control.

Feb 08, 2008 08:32 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
So true Marlene. There's always two sides to every story. Buyers don't want us to hear this side. I've had deals kick because the buyers went out and financed a new car 2 weeks prior to closing. They figured since their credit was already pulled they would be OK. Wrong!!! They weren't my buyers and obviously someone forgot to tell them about pre closing credit check.
Feb 08, 2008 08:37 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Jason - You guys get a bad rap from people who just can't own up to their own responsibility.  I just had to speak up.  I thought it might carry more weight coming from someone who's not a lender.

Jimmy - Yup, REALTORS® do experience some added layer of difficulty when purchasing property.  I'm happy to spread the word that there are some great people out there doing loans.

Feb 08, 2008 08:40 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate
BB- Yup, it sure does happen.  As often as we try to remind our buyers, they are just caught up in so much during the escrow process that telling them once is just not enough...we need to keep reminding.  Thanks for stopping by.
Feb 08, 2008 08:43 AM
Jackie - computer-training-atlanta.com
770.498.7333 - Atlanta, GA
Learn to leverage technology to get more done.
Marlene - so true. I created a tips brochure originators can give to their clients called "5 Mistakes . . ." Three of the mistakes are also on your list. Great work, and I know your lender partners appreciate you for "having their backs."
Feb 08, 2008 01:42 PM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate
Jackie - Thanks for the affirmation that this post is on the right track.
Feb 08, 2008 05:01 PM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Someone in my office actually had one of their buyers file for bankruptcy two days before close! It was crazy and they were amazed that they didn't get the home. They thought that the loan was already through and that wouldn't check again before funding the loan. They wanted to have more money so they could afford the home easier.

You have to think before you do anything before close.

Feb 11, 2008 04:17 PM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate
Todd - Sure makes you wonder sometimes doesn't it?  It obviously made perfect sense to them.
Feb 12, 2008 12:32 PM