There's a TON of work that can be done in advance that is usually saved to the last minute. Most Realtors ask a buyer to contact a lender and at least have a conversation before they find a home, and many ask them to get initial documentation to their lender as well.
But why not do EVERYTHING POSSIBLE before they sign a contract?
1) Moving and buying a home is stressful enough in itself. Why leave all of the loan work to be done during the same time they are worrying wih packing, movers, inspections, switching schools, cleaning, and everything else on their to-do list?
2) Here locally, 1 in 3 contracts that are written never make it to closing..... most often caused by loan problems that were foreseeable.
Here's what we do differently, and I would love to see the whole industy move to the same best practices so that we can all provide a better home-buying experience and provide a much higher level of professionalism by protecting our buyers and sellers.
1) Get all of the verifications in advance.
Everyone else (and I mean EVERYONE) has employment verifications, rental verfications, copies of tax transcripts, social security verfications, etc.... AFTER the file is sent to processing so that these things are avaialble for the underwriter to review. Then a week or two later when those get in they are sent to the underwriter.... and after waiting in line to have them reviewed..... you find out about a problem LAST MINUTE, and the deal falls apart.
Guess what???? ALL of those things can be ordered as soon as we do a pre-qualification. Why on earth is the industry as a whole leaving those things until later? To save a few dollars..... maybe $10 or $20 and an hour or two of someone's time?
2) Do your own search on county records to look for judgements.
It's free, and you just type in a name to search, and it only takes a minute. Why the heck are we waiting for title after they go under contract???? I see people all the time who have judgements filed that are never reported to the credit bureaus.... so you don't know about it until after the title report comes in. Think about it. If you got a judgement against someone, would you report it to the credit bureaus???? Probably not. Most individuals and small entities wouldn't even know how. Do the search yourself. If a judgement shows up, you can make sure a satisfaction has been filed before they ever sign a purchase agreeement.
3) Make sure that you loan officer is actually reviewing all the paperwork
and not just collecting it to send on to the underwriter. Many, many loan officers submit files with just the required initial documentation. The initial documentation typically triggers questions and more documenation. Like if we see child support or a garnishment being taken out of a paycheck. We can just send it through and wait for the underwriter to ask questions, or we can address it up front and make sure that there are no problems and that the underwriter will have everything they need to make a decision.... instead of leaving it up to someone else to decide what additional documenation is needed on the file and getting last minute surprises that were totally foreseeable.
Mike and I request complete documenation and review it all before our first appointment with the borrower (our Discovery Appointment). At the Discovery Appointment we make sure that we are discovering everything we possibly can with the file. We comb through the documenation in advance, ask for additional documenation when we have questions, and make sure we have the WHOLE STORY together with all letters of explanation and documentation at that appointment. We also have them sign forms to order SS verfications, tax transcripts, empolyment and rental verficiations while they are there, and we always do a public record search before the appointment as well. It usually takes us about 2 hours to prepare for the appointment and 2 hours at the appointment. It has always been WELL WORTH the extra 4 hours work to make sure that the transaction is smooth and that there will not be any surprises that we could have anticipated.
Yesterday alone we found a judgement on someone that the satisfaction had not been filed on yet. She will be working this weekend to get together everything she needs to get the satisfaction filed..... before she ever even found a house.... so she's not trying to do this in the middle of packing and cleaning and inspections and dealying a closing over it.
We also had an employment verification come back with a surprise yesterday. Turns out she was a little off about her time on the job.... which means that she can't close until April 17th. Thank goodness she wasn't already under contract. Her Realtor was already planning on a closing around mid-March. Anyone else would have waiting until she was under contract, and would have gotten that back the end of February.... probably killing the deal.
What do you think? Overkill? Or best practices?
