Purchasing a home can sometimes be confusing and stressful, and some people in the mortgage/real estate industry will take advantage of consumers. Yes, sometimes there are problems and or issues that come up. But sometimes these problems were known ahead of time, yet never brought to anyones attention. Better yet, some of these problems should have been talked about prior to the mortgage application when the loan officer did their pre-screening of that borrower. Overall, it comes down to honesty, integrity, knowledge, very good service, and just being upfront when problems arise.
First time homebuyers that have never experienced buying a home can sometimes be taken advantage of. In my opinion, there are some key phrases that can sometimes be cause for concern. I call these Red Flags. And for those that have done this before, it doesn’t mean that it won’t happen to you. Anything that I mention below, if you hear it more than once, especially in a short time period, this could be your warning, aka Red Flag.
The General / Basic Red Flags from both the loan officer or the realtor :
- You finally found that loan officer and or realtor that you want to deal with. This person was always getting back to you when you were first shopping for around. Now you have signed with the realtor or the loan application with the loan officer. A few days later, you try getting a hold of them and they don’t get back to you right away. If you are leaving a few messages per day, both e-mail or by cell, and this continues for close to 48 hours, there is no excuse. This is a huge Red Flag if this takes place a few days prior to settlement/closing, especially the day of closing.
- There are Key words or phrases used often that one should be aware of. “I promise”, “I guarantee”, “no problem”, “I’ll fix it”, “I am the best”, “I am the cheapest”, “I have the lowest fees”, "I am honest", or "10 day guarnteed closings", . (a guarantee filled with many small print) Overall, such words could mean trouble.
- Delayed phone calls. They say, “I promise to call later or tomorrow”. But you don’t hear back from them and now you have to track them down. Yes, things happen. But if this seems to be a reoccurring issue, then you might have problems.
- Deadlines – If there are certain dates on the contract or with the lender, get everything in as soon as possible. If the loan officer calls you up the day before or the day of settlement telling you it has been postponed or that you are denied? Ninety-Nine percent of the time, they knew previous to this and this is a major Red Flag.
Red Flags from loan officers or lenders :
- When you are shopping for a mortgage, the loan officer never offers you an itemized fee sheet. They can’t give you a Good Faith Estimate until a full application has been taken. These just tell you the total numbers over the phone.
- They don’t offer you the rate or the payment. This might sound silly, but I had 3 clients just in one month that this happened to them. Yes, the consumer should have asked. But maybe the loan officer talked circles around that client, and then they just forgot. Sometimes just hearing, “you are qualified” or “you are approved”, gets you excited, hence why you might forget to ask these important questions. The loan officer should have offered more than just words.
- You find a loan officer because their rates were very good. But since you have so much on your mind, they never go over the rate lock-in features of that program. If they don’t cover this prior to application or when you were shopping for a mortgage, and especially during application, this could be trouble. Or they get you to sign a rate lock form, but they convince you to float. Question, did that rate even ever exist then?
- You might qualify for a FHA or VA loan, but tell you that you don’t want those kinds of loans, because conventional is better for you. This has happened to at least 5 people that I know of. The main reason was because the lender wasn’t FHA or VA approved.
- If your lender/loan officer changes rates or fees during the process or at settlement, don’t just give in. Avoid excuses such as; “your credit score dropped”, “you have less income”, “your credit isn’t as good”, etc, etc. There are new laws to where such changes have to be told to you in writing 3 days prior to settlement.
- When comparing the Itemized Fee Worksheet, aka the good faith estimate, don’t just compare the bottom line, “total costs to borrower”. Some loan officers low ball certain 3rd party fees to make their good faith look cheaper. Or they escrow less taxes on paper that is mandatory in each state.
- You are at closing and the loan officer says, “don’t worry about those docs, we can correct that later”. NO !!! Once you sign, it’s over.
- Scenario : Credit score less than 680 and less than 20% down. You know you should have a FHA loan, but the lender says going the conventional way is better…. major red flag. In my opinion, going FHA in this scenario is cheaper monthly.
Red Flags from realtors or real estate offices :
- When the realtor only shows their listings. If you want to see homes and they keep showing those only listed by their company or that they are selling themselves.
- One complaint – When a realtor has a full time job that is not real estate related. I heard a story that the buyers had to wait until their realtor got up to show them the house. This was at 1 pm.
Red Flags from consumers :
- Consumers, never hesitate to tell your loan officer or realtor everything. Even if they don’t ask you and you think it’s pertinent to the transaction. Don’t take that chance in not telling them. We are all here to help you and not pass judgment.
- Be loyal and just don’t hop to every realtor showing houses. Build a rapport with that person. That’s if you feel comfortable with that person.
Conclusion : My biggest problem is when the person that you are working with keeps giving you excuses to when things are delayed and or dates missed. Yes, things happen, but 9 out of 10 times, it shouldn’t happen often. These types of excuses are usually to delay you in finding out the truth, until it’s too late. If anything above happens for 2 or more days in a row, don’t wait, contact their manager or boss. If you don’t feel like you are getting anywhere at anytime, seek a professional in the particular field or possibly seek legal advice. It’s one thing to give someone the benefit of the doubt, it’s another to be lied to or misled intentionally. Never hesitate to ask questions.