Quicken Loan Pre-Approvals - A Worthless Piece of Paper

By
Real Estate Agent with Key Properties of the Hudson Valley NYS DRE #40BO1055114

Does Your ONLINE Pre-Approval Cost Money? 

Well if it is wrong, it may do just that!

 

HUH?A new construction listing of mine is up and ready to go. Recently I get a call from a potential buyer wanting to see this home as soon as possible. He provides me with a Pre-Approval that is over the asking price. There are a ton of other questions that I asked him, like time frame, did he have anything to sell, credit scores and the likes. Since I had not previously met him before I wanted to see if he could buy this home before showing it to him.  We decide to meet at the property. After showing him this home he wants to put in an offer. While filling out the paper work he then tells me that his down payment is coming from the last deal he had that didn't close? WHAT??

So now I have a million more questions about what happened and WHY the last deal fell apart. It was in a different county and for $50K more than the new prequal we had. My thoughts are with the new home at a lower price point it should be okay. How could he have gone so far in the last process and still not qualify? So I was being optimistic that we could move forward. We had a pre qual saying so, right? HAH!  So I explained to him that we needed to get him to a local lender to actually qualify him. This needed to happen ASAP so that the builder would entertain his offer. Without it, we were not going to be able to get him this house.

Needless to say the deal never happened. The buyer has enough income and decent credit scores on paper, but the problem was the way he was getting paid. Parts of his income is paid in bonuses and overtime. This won't work for his loan. So we are dropping the price point we are shopping at now and we will find him a different home that will work. My local loan officer was able to guide him in the how, what and why of getting a mortgage and how all of this works. She tried a few different ways to make it work, but her underwriting said we would not get to the finish line. 

The pre-approval he had first time got him from offer, to contracts, to mortgage application and a home inspection. While I don't know what bank that deal was, I know that it cost him money. Time and money to all parties. This was almost an instant replay except that the red flags of caution and concern unfurled when he told me that the last deal he had tanked. How it got that far is beyond me. 

As a consumer make sure that your bank knows all the details of your income and how it is earned. Not all income is created equal when applying for a mortgage. Banks like consistent and documented numbers. Loan to debt ratios matter. How you get paid is part of the picture and sometimes seems unfair. 

As a real estate agent when I see or hear a part of my clients ability to buy of concern, I jump on the opportunity to find out answers BEFORE we get too far along in the process. Having a lender that goes above and beyond in this deal was super. My clients are sad that the home they wanted is not going to work, but happy that we did not get the process going again like last time. They are baffled that it could have been an instant replay. They thought they were doing the right thing. Now they understand the limitations and we are looking at homes in the price range that they will be able to get a mortgage. 

Another reason to work with a local, individual mortgage broker AND a local real estate agent. 

Quicken LOANS.. you could have cost my client more money. That Pre-Approval letter was worthless. Absolutely worthless indeed!

published by: Janis Borgueta Key Properties of the Hudson Valley in Newburgh NY. Her blog is about living, working and Real Estate in The Hudson Valley. Information here is a community service to the public.  Please subscribe to this blog. When you are looking to buy a new home, Search the MLS for New Homes in Newburgh NY.
You can contact Janis at (845)-527-7115 or find her on Google+
close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Bobbie Smith 08/30/2014 10:19 PM
Topic:
Lending / Financial

Spam prevention
Show All Comments
Rainmaker
653,941
Bobbie Smith
Stroudsburg, PA
570-242-1891

Excellent post Janis. The public keeps getting lead down a road that only leads to unhappiness by these "online" pre-approvals.

You are right. ALWAYS GET PRE APPROVED BY A LOCAL LENDER AND WORK WITH A LOCAL REAL ESTATE AGENT.

This Buyer has lost more money, and time, than what he ever needed to had he received guidance like yours from the start.

Great post!

 

Aug 30, 2014 10:15 PM #1
Rainmaker
878,458
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

Thanks Bobbie, I am now working with him as a buyers agent and we are hopeful to get to the finish line soon.

Aug 30, 2014 10:24 PM #2
Rainmaker
562,101
Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

Oh gosh, yes, I can see how that could be a real issue.  Glad he is working with a real person now, and one who is knowledgeable and honest.  - Debbie

Aug 31, 2014 01:14 AM #3
Rainmaker
3,315,630
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Janis,  I have to so agree with you,  I had almost the same problem a year ago. 

Aug 31, 2014 01:31 AM #4
Rainmaker
1,812,023
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Janis, i shudder if a buyer comes in with Quicken loaan approval letter but I have had some of them work fine...the issue is how a buyer gets paid...patience here is a virtue!

Aug 31, 2014 02:29 AM #5
Rainmaker
878,458
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

Debbie- it is not a simple formula anymore to get a loan approved. Every deal has its only set of issues and shopping for a home that is too expensive it not a good thing.

Thanks Will - sorry you and your buyers had a problem

Ginny- I have had them work in the past. I think that it is harder now than a few years ago to make them work well.

Aug 31, 2014 03:26 AM #6
Rainmaker
1,573,300
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Geneva Financial, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Janis: In all my years as a professional agent, I had one encounter with a Quicken loan pre-approval and it turned out just like yours. After that, I always require a cross -qualification for my sellers protection when listing a home and if representing buyers, I have a long talk with them to educate them, then put them on the telephone with one of my trusted lenders.

Aug 31, 2014 08:27 AM #7
Rainmaker
3,278,233
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Janis I dread anytime the buyers have their own lender...most of the time it works out but a lot of extra work and drama on my end....Endre

Aug 31, 2014 03:32 PM #8
Rainmaker
878,458
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

Many deals are lost for no reason Endre. More work for sure!

Aug 31, 2014 09:21 PM #9
Rainer
144,447
Gordon Wood
Canyon Ridge Realty LLC - Scottsdale, AZ
480.226.2842

I Agree with this article completely . They waste a lot of paper on this advertising

Sep 04, 2014 05:00 AM #10
Rainmaker
1,536,321
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Some clients of mine had a bad experience with a Quicken refi - the appraisal was very low and unrealistic.  I have learned to avoid dealing with this company.

Sep 14, 2014 01:00 PM #11
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
878,458

Janis Borgueta

LIC RE Salesperson
Questions? Ask Janis
*
*
*
*
Spam prevention

Additional Information