Tom Parke, Mortgage Lender, discusses why it is important for sellers to choose an offer from a buyer with underwriting approvals before they make an offer on a home. Pre-approval letters get issued without going Nano deep analyzing the borrower’s income, assets, debt, credit, employment history, etc. This can cause horror stories and cause a buyer to be denied a loan. That is not a win for anyone.
The Power of Underwriting Approvals
When we are screening buyers to purchase a home we want to make 100% certain that we are always being proactive, not reactive; that we are getting all of our ducks in a row up front to ensure a smooth closing.
Nobody likes surprises! Like many businesses, the business of lending is something where you learn by stepping in it. My team and I have been working together for 16 years and we have closed over 2,200 home loans. Believe me, we’ve stepped in everything and anything there is to step in. We are aware of where the landmines are and we want to avoid them.
Sometimes we do have buyers that are often a little bit surprised at first by how thorough we are upfront. By being that thorough upfront we only have to run this preapproval once and there are no surprises that come up later.
Again, whether you use our team for your loan or whether you use another bank for your loan, that’s fine, we are just here to guarantee the seller that the buyer has the ability to purchase the home that they are wishing to buy.
Pre Approval Letters Are Not Underwriting Approvals
We have seen it happen many times before where another lender from a reputable company had issued a preapproval letter without going nano deep in terms of analyzing the borrower’s income, assets, debt, credit, employment history, things of that nature. We will typically ask a few more questions than others will and we will run this by underwriting which is most important.
Most lenders, especially in a busy competitive market such as the bay area, will not underwrite a buyer’s loan until they are already in contract on a home. Talk about not putting the cart before the horse. We want to put the cart before the horse. We want to make sure the borrower has been underwritten and approved before they are even making an offer on a home.
As a seller, before you accept an offer from a buyer, it would behoove you to make sure that the buyer has been approved by an underwriter. The file has already been scrutinized and thoroughly reviewed by an underwriter so there will be no surprises. There will be no horror stories of:
- There was a derogatory incident on the credit report years ago that is coming up now that is biting us in the rear.
- You switched jobs six months ago and your debt to income ratios are too high.
- The reserves, we can’t count this type of account toward your reserves so you don’t have enough assets to qualify for this.
What To Do If Home Loan Gets Denied
All of these have happened within the last 30 days with other lenders and the loan falls into our lap. We have to pull it out of the fire for the buyer or for the seller, which we are happy to do. That is the service we’re providing to the seller upfront is making sure that buyer you are selling the home to 100% has a guaranteed loan commitment from our team. Even if it is just a safety net if you work with another lender first there is a guarantee that the buyer’s loan will close once the seller accepts the buyers offer.
In another video, Tom discusses the importance of screening buyers and why sellers want buyers with underwriting approvals and why it is a win for everyone.
The Tom Parke Mortgage Team at Mason-McDuffie Mortgage Corporation is a direct mortgage lender specializing in residential real estate finance for home purchases, refinances, lines of credit and construction renovation.
The Tom Parke Mortgage Team has earned “President’s Club” Honors every year since 2009 and is ranked among the Top 1% of all loan officer teams nationwide for production.
The Team’s goal is to enhance the financial lives of their clients, business partners and colleagues.
With more than sixteen years in the financial services industry and after having closed the home loans for over 2,200 families (and counting!), The Tom Parke Mortgage Team offers a wealth of experience and knowledge in the home financing process.
Tom may be reached at 415-828-5004 or www.TomParke.com.
Kathleen Daniels, Certified Probate Real Estate Specialist understands the importance of underwriting approvals. As Tom Parke points out in his video, some pre-approval letters are not worth the paper they are written on because the lender was not thorough upfront. By going Nano deep and asking a lot of questions upfront there typically are no surprises once a file gets through underwriting and a seller and a buyer get to experience a smooth closing with no surprises.
If you need to sell real property in probate, under conservatorship or in trust, give Kathleen a call at 408-972-1822. When it comes time to choose an offer, Tom and his team will examine the buyer’s financial ability to purchase the home. This provides the representative of the estate peace of mind knowing that a thorough underwriting review is completed.