I went to a meeting yesterday about what's going on the mortgage world and how to protect our clients, and ourselves. Here are a few of the things that I learned, in no particular order:
- Make sure the purchase agreement includes language that protects the buyer, and their deposit, in the event that the loan does not fund for reasons outside the buyer's control (i.e. the lender going out of business) so that the buyer can get their full deposit back.
- Make sure that the lender in the transaction is someone that you and your client know and trust -- whether you are the listing agent or the selling agent.
- Give extra time for removal of contingencies, funding and closing. With lenders tightening up, they are scrutinizing everything more and you don't want to have to ask for an extension. Additionally, the lenders with the good pricing are getting very back logged.
- Make sure you get not only a preapproval letter, but a rate lock commitment and a commitment letter from the lender, which shows that all conditions have been signed off by the underwriter, BEFORE you remove contingencies.
- It's a good idea to have a back up plan (Lender B and Lender C) just in case Lender A cannot perform.
- You might want to check on http://www.salary.com/ to see what they say the average person doing your job makes -- lenders are.
- If some or all of your payment is going to be a gift, make sure it has been "seasoned" and in your account for at least 2 months.
- To get the best rates, your FICO score should be 720 or higher--although some lenders are allowing 680.
- Have your lender check your FICO score and do whatever you can to bring your score up so you can get the best rate possible. In some cases, this can take up to 6 months. So plan ahead.
- Some lenders are looking for 25-30% down, and 6 - 12 months in reserves, if you are not doing a fully documented loan.
- Be prepared to have your tax returns, W-2s, paystubs and the like available in the event the lender requires them.
- Consider working with a reputable mortgage BROKER rather than a banker who only has access to proprietary products. BROKERS have access to many more programs and things are less likely to go South.
Below I have pasted in some information from a local lender, who I have found to have the very best rates: