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The Prequalification Process to ensure your Buyer is Ready to Buy a Home

By
Mortgage and Lending with Peoples Mortgage

Most of us are aware of all the changes our industry has been though over the past five years and the many more changes that are coming our way. The real estate and mortgage business is just not what it used to be. To be honest I think that is a good thing.

Just because RESPA, TILA and the Government have made our industry a bit more challenging. That doesn't mean your clients has to be a victim of all the regulation and obstacles that have been thrown in our way. Believe me, there are more regulations coming. If your not already ready for them and if you don't start preparing your buyers for them now you may lose a few deals this year. Just trust me on that. The Dodd-Frank bill, will be rolling out in April. It will include many more restrictions like compensation overhaul, communication via disclosures along with some things we still don't even know about yet. Very frustrating for all of us.

Most consumers don't understand the details of the lending process and what they did understand most likely has changed.  For example: the old GFE was very detailed and broke down everything being charged on one page, very easy to read. The new GFE doesn't explain line items very well, and spreads all the numbers out over three pages of gibberish. Which makes understanding what and where the money is moving to and from very confusing for the consumer to understand.

What we all need to do is take time to listen to the borrower. Make sure you understand their needs, and work with them to make sure they understand the details of the home loan process today. Getting them pre-qualified and ready to purchase a home BEFORE they take the plunge into the home finding process. Make sure the borrow is prepared, by asking questions upfront. I do this by spending time with each borrower. Making sure I understand what their long and short term goals are. Also, meeting with them face to face in order to build the trust and solidify the relationship.

My ability to communicate is key in order to structure the loan and get all the details laid out early. Prepare the borrower upfront for any potential problems. Explaining WHY we need what we need is very important. Connect the dots for the borrower by using real life examples. The borrower may get frustrated if your not upfront with the reasons we may need a certain document or a tax return or explanation letter. Taking the time to walk the borrower through the process using  real life examples may be the most effective way for them to understand why?

I will make myself available to all my clients seven days a week. I believe taking the time to meet with your clients if possible is an important aspect for building their trust. This may be old school for some of you out there. But, I want to show how passionate I am to work for each borrower. Meeting them face to face is a critical part of the long term relationship processes along with referral process.

I want to make myself available to answer questions before, during and even after the transaction is closed. Making sure there are no surprises and no one mis-understands the terms of the loan. This gives each client a sense of support, as the home buying process can be down right frustrating for some. The more information the borrower has, the more powerful and confident they are when they are out looking with their real estate agent.

Providing our borrowers with a detailed "Documentation Checklist" prepares them for the transaction. It lists out the details of what documents we need along with an explanation why we will need them. After our initial meeting our clients are more confident about what goes into the transaction and why. Along with understanding what thier closing cost consist of and why they are what they are. Most importantly what their monthly payment will be including taxes, insurance and mortgage insurance if necessary.

Our initial meeting is usually planned way ahead of the initial loan application if possible. This will uncover any challenges with the file then. So, we can prepare for them or correct them before it becomes an issue for underwriting.

This should be a priority for every real estate agent today.. A detailed pre-screening and pre-approval before you start showing them homes. It's necessary for this process to be done right the first time. We just don't have extra time to waste. Providing the borrower with all their options allows more flexibility for the Realtor when showing them homes. We want to support the Realtors and their borrowers. Along with send some of our own pre-approved borrowers back as a referral. We have built our business on finding buyers everywhere we go.

Loading the borrower with as much information as possible makes them feel more confident about the whole process. Making ourselves available for questions along the way is yet another way to make borrowers feel in control of what is going on. Providing detailed numbers including payment for a certain offer along with all the options of down payment is critical too. They can be out on the road with a Realtor partner of ours and they want to be able to get answers while in the car. We want to be there for them.

As a broker, we are experts with all kinds of loan products not just a few. We have the flexibility to move a loan from one lender to another. FHA allows the transfer of an appraisal and some of our conventional lenders will allow a transfer if needed. Flexibility is key.

We want to PARTNER with our Realtors to help them grow their business. We want to be working on potential buyers they may have sitting in their databases today, that we may able to turn into qualified borrowers tomorrow. Get them off the fence and build that potential opportunity into a deal now.

Teamwork and partnerships are the KEY to maximizing your success.