Who should I see for the financing of my new residence? See your agent first. I'd like to tell you a story that has been repeated too many times. A young couple goes to buy a new home. They sit down with a friend of a friend who just happens to be a loan officer. They think, "Well, Jenny said he or she was a great person and real funny."
So they sit down at the person's office and start the process. "I'll get you the best rate and don't worry about anything. This won't cost that much, and oh, by the way, here is your pre-approval letter."
I had a couple come into my office one time that wanted to buy a home. I asked "have you been in with a lender yet. Knowing how much you are qualified is paramount to a successful transaction. It doesn't do any good to look at homes you can't buy. So this couple said that they had been in with a loan officer. I asked could I ask who the lender was. They said it was XYZ lending. I said in a matter of fact way "well you have two questions to ask yourself "are you getting a new lender or a new agent". You see it doesn't do a lick of good to right a contract that won't close. The most horrifying event in an agents life is when the buys, sellers and agents are at the closing table and there is no money. The whole world just seems to stop. The worst thing is if the seller has now moved out of their home and the buyer has $2,500 in earnest money at risk. Who is going to pay for the damage? The buyer with their earnest money and what about the lender? In Hawaii we used to say "here today and gone to Maui" no where to be seen.
Let's start with the contract: When you sign a contract to purchase a piece of real estate, you put down what is called ‘earnest money', which shows your good faith in the contract. This amount can vary from $500 to $10,000; the larger the sum, the more good faith. Remember, the seller is putting up their home as earnest. The larger the sum, the better the contract looks -- showing your viability as a buyer.
You have within the contract a prescribed amount of time to acquire a loan commitment. If your lender keeps telling you not to worry, "no problem, we are almost there", and your loan commitment date is coming up and gone, your earnest money is at risk.
Remember that pre-approval letter? It only says with the little information the lender has you look good for a certain amount. That piece of paper is only as good as the lender and the information you gave them. If your lender is a charlatan, your pre-approval letter isn't worth the paper it's written on. If you didn't give them accurate data, then it's "garbage in, garbage out'.
A HUD statement gives you a fair estimate of your loan cost and fees in the purchase from your lender. Many times you will be told all the costs are all closing costs. They are not closing cost; closing costs are actually escrow fees, title policy & search, & prorated taxes.
Many of the fees you will pay will be just loan fees for the privileged of borrowing the lender's funds and insurance to make sure they get their money back. Lenders love to call them closing costs because it sounds like they are all the same no matter which lender you see. If you are dealing with a second-party lender that doesn't have their own funds, they will package your loan for a bank or another lending institution, and you guessed it, they also have fees. These are individuals that do the paperwork and have to answer to an underwriter. This is the person that calls all the shots (the money man).
How do you know the lender is who they say they are? Well, as my granddad used to say, the proof is in the pudding. A real estate agent doesn't get penny one until the property gets sold. So what is in their best interest? GET ‘ER DONE! If you want the names of a number of dependable lenders see you agent. Agents know which lenders with blow smoke in your ears and which one gets the job done. Your agent has a working relationship with a number of reputable lenders. All you have to do is ask. So we are back to square one:
SEE YOUR AGENT FIRST
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