Special offer

Years in business do not equal KNOWLEDGE

By
Real Estate Broker/Owner with Active Adults Realty

There are no easy loans these days. At least in my market, there are only 4 ways a buyer can purchase a property:

  1. CASH
  2. 20% down AND excellent credit - 750 range
  3. FHA which has a maximum loan amount of $375,000
  4. USDA Rural Housing which has income limits

For those in the mortgage business that are reading this, don't write and tell me about other solutions; these are the real options.

Even if the client should qualify for an FHA loan or USDA Rural Housing loan, you need to make sure that the buyer is working with a loan officer and a mortgage company that actually knows how to get that loan approved.

A well known name and a loan officer with "25+ years in the business" is not necessarily a good sign. The requirements of a USDA Rural Housing loan are cumbersome and the paperwork has to be in order and perfect.

When the buyer agent tells you that "everything is going great and we're on track" even if you have received a loan commitment, be very wary. Up until the night before settlement, I saw no reason to doubt the buyer's agent, much longer in the business than me, or the mortgage company, one of the big names in the news that is touted as a "good guy" and a survivor, even a good investment.

What I have learned is that neither had a clue about how to do it right. While the buyer's agent was playing golf, I was getting calls from the Underwriters at the buyer's mortgage company asking my help in finding a way to get the funding approved! I represent the seller!

I don't know how this story is going to end, but I know one thing - the next time I see that a Buyer is using this particular loan officer, I will ask for a final loan commitment before presenting the offer to my client. Anyone can do the easy loans, but only a select few really take the time and care enough to do what needs to be done today.

If I wrote about the whole story, this would be the longest blog in AR history. Here's a tip - if you have a condo listing and a buyer needs to go either FHA or USDA Rural Housing for financing, the first step is to make sure the Loan Officer gets an FHA SPOT APPROVAL. USDA follows FHA guidelines and processing will take longer than a conventional mortgage.

Comments(7)

Mary Strang
Viroqua, WI

IMO: It is trying times for anyone seeking a loan other then the 80/20. Also if they are getting the later of your list of loans, be sure to allow at lease 4 extra weeks for the closing date too.

May 09, 2009 01:10 AM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I agree .. experience doesn't count if you have been doing things wrong

May 09, 2009 01:49 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Kathy, great post.  I've had more of these than I want to admit to. 

May 09, 2009 02:01 AM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

Mary, Fernando and Gabe - EXACTLY. Wouldn't you think the big company loan officer would know that? How about the Buyer Agent? The new mortgage company that I referred to them when it fell apart, just emailed me that he can get commitment in 10 days and we can settle in 45 days. He actually knows how to do the do, not just talk the talk.

May 09, 2009 02:33 AM
Richard Weeks
Dallas, TX
REALTORĀ®, Broker

375000 is about 100000 more then you can get in the Dallas area.  What is wrong with that picture?

May 10, 2009 05:32 AM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

Richard - Coastal Delaware is more of a resort area. We have the Atlantic coast line. Big D is just more affordable!

May 10, 2009 12:38 PM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

I hate to report that this transaction has fallen apart completely. Lessons learned tell me -

  • Even a Written Commitment from a major mortgage company means nothing these days
  • Condos are particularly difficult to finance, especially in a small condo community
  • As Kenny Rogers says, you need to "know when to fold"

My Seller has decided to take the condo off the market.

May 17, 2009 02:55 AM