Are Buyers Liars or Are They Simply Misunderstood?
You’ve all heard the saying — buyers are liars! Most of them are NOT liars; they just don’t know what questions to ask when they sign a contact and apply for a mortgage.
If you are the agent representing the buyer, you need to make sure that they qualify for the mortgage. While the loan officer may not be able to share some of their financial details with you (Right to Privacy Act), there is no rule out there that says they can’t tell YOU about themselves, their credit scores and basic information, so you can determine if it’s going to be a slam-dunk deal — or even be able to close on time.
Homebuyer Cheat Sheet
Do you have a pre-approval letter? Notice the date. Is it 6 months old or older? Read the conditions. Do they have a home to sell? Did the file go through automated underwriting or did the loan officer just review the paperwork and give his/her opinion?
Whose names will be on the loan? You see this all the time—two buyers sign a contract, but because of credit or some other issue, only one buyer ends up signing the paperwork. Or maybe they had to add a co-mortgagor. Your title work could be delayed if you don’t have the correct names on the title order.
Where do they work and how do they earn their income? Are they hourly, salary, part-time, self-employed? How long have they been on the job? Getting a loan approved for someone who is self-employed is tricky at best. Oh, and if someone tells you that they just started their career in sales and “were promised” that they would make a lot of money, that’s a red flag, too.
What is your credit score? While the loan officer may not be able to tell you, ask the buyer to share it with you. Lenders use the middle score as the basis for a loan approval, and it should be in the 680 to 720 plus range or they are going to have trouble getting approved for a loan.
Is the money for your down payment and closing costs in your bank account right now? If not, where is it coming from and how long before it will be deposited? If they are getting a gift, there is more paperwork needed that may delay the closing date.
What type of loan are you approved for? This is where you’ll need to check the contract again. It may say they have applied for a “conventional loan,” and if they were switched to an FHA loan by the loan officer, FHA has its own set of rules that have to be followed.
Of course, there are so many other questions you could ask, but use this as a starting point to determine if your client is capable of buying a home and getting a mortgage.