What Makes a Good Lender ?

Many people who are deciding to buy a house take the convenient way of being preapproval by using an online service.  Although this may be convenient, in most cases it is not the best source for that all important preapproval letter.  Purchasing a house can be a very stressful and emotional time for my clients.  There are many obstacles during the process, the last thing a buyer needs is an incompetent loan officer.  The number one cause of stress for my clients is not the inspections and escrow process, it is getting fully approved for the loan.  A lender is only as good as the loan officer who handed out the preapproval.  If the loan officer simply looks over the preapproval documents and glances at the credit history in order to rush out the preapproval it is a recipe for disastor.  A loan officer that carefully reviews all documentation, critically reviews the credit history, and asks the right questions makes the buyer feel like their in a dream during escrow period not a nightmare.

For example, I have a listing that fell out of escrow due to the buyer not being able to get fully approved for the loan.  This was after the loan officer told me that the buyer was fully approved and they were waiting for the loan docs to be drawn.  The next thing I know there is an email from the buyer's agent cancelling the contract.  One day the loan is approved and the following day the contract is cancelled.  (That's my nightmare.)  The proprety went back on the market and one of my new clients wanted to purchse the house.  These people are great clients, they are smart, know what they want, and even had two preapprovals.  Despite the online approval and the second one with an unknown lender, I requested that if they wanted to purchase the house they had to become preapproved with one of my preferred loan officers.  Sure enough during the meeting with the loan officer, which I attended, multiple issues were discovered from the questions asked by the loan officer.  These were issues not found during the preapproval process of teh other two loan officers.  But like a good Realtor, a good loan officer also knows how to correct minor problems, so the potential deal breakers were resolved in the first few days and now my clients are preparing to move without any worries.

                                            

So remember, a loan officer who does a thorough job during the preapproval process will lead you to a fully approved loan and your escrow will feel like a dream. 

 

FICO Scores and More

What is a FICO score and who cares anyway?  FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score.  Your FICO score tells lenders how good you have been paying your bills.  The more credit cards and loans you have the higher potential for your FICO score.  However if you miss a payment it could damage your FICO score.  When you go to buy a car or a house the first thing a lender does when performing a preapproval is run your credit. 

 

Depending on the type of loan you will need to have minimum FICO score.  For instance, if you are applying for a FHA loan you will need to have a minimum FICO score of 640. If you are trying to get conventional financing your score will have to be at least 660 and some lenders will require 680.  One of the most important things to remember is paying your bills on time will save you money.  When you are not late in paying your bills it has a positive affect on your FICO score.  You may qualify for a FHA loan with a 640 FICO score but your interest rate will be higher than if your score was 680.  This will cost you big money over the life of the loan.  So remember, not missing a credit card payment does not only raise your FICO score it also saves you money when you need it the most for a car or home loan.