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I am allready preapproved for a loan. We were told by our agent that the seller wants us to get preapproved with their prefered lendor before they will accept our offer. This is a bank owned home. The seller is also the approved lendor. I contacted my lendor and he told me that some banks like to play that game, what ever that game is.
Here is what my lendor and my real estate agent told me. I should proceed with the preapproval process so that I can get a letter from the "prefered" lendor saying that I am preapproved with their bank. Their thoughts are that when it enters escrow as long as I have the funds to satisfy the cost of the home it won't matter then.
Questions:
why does it matter to the bank that owns the property where I get the money from?
They would rather you use them so they can make the profit on the loan. Yes, very common for banks to do this which is one reason why buying bank owned properties sometimes take forever.
The bank (seller) wants to make sure you are a viable candidate to purchase their home. With all the recent restrictions, we are seeing the highest percentage in decades for declined loans. It's a valid (and common) request.
What I dislike about the request: When you provide information to the bank (seller), they have your complete financial picture - or that is the intent. Financial privacy from the seller goes out the window. So, they know that you have 50K tucked into another account and could really pay another 5K (or more) towards the purchase. It's human nature to want to show someone you are qualified.........just don't tell them how qualified.
This is what I recommend - ask your loan officer to "skinny down" a copy of your application (1003). Ask him/her to not put anything on there that is not needed for the transaction.....don't cut it to bare bones, but don't put any assets that are not needed. Ask your loan officer to provide you a copy of your credit report. Both of these should be in PDF format for emailing. Now, when you "apply," get the other loan officer's name and email and you'll save a ton of time. Be sure to put a read receipt. Immediately after sending off to the bank loan officer, send your agent and and copy listing agent agent confirmation that you sent the bank loan officer the necessary information to be considered. (This way your agent can have a copy of your email to put on the offer in the event the bank loan officer does not follow up with you in a timely manner). Put a nice fluff cover letter to go with the application and credit report ("to whom it may concern"), and "respectfully request the attached credit report be used for qualifying evaluation." Spell out anything that is not apparent on the application (example: current home sold, but to count the other mortgage payment so that your approval is not contingent on sale and settlement of other home). Ask your loan officer if there are any items that should be brought to the attention of the other loan officer.
You can ask your loan officer if he/she knows anyone at the bank (seller) - they may be able to expedite the process. My time at BofA has paid off, I can get preapproval letters for homes they are selling for my buyers - just give my former co-workers a call.
The other bank (seller) will most likely come at you with a hard sales pitch. Be prepared and keep your face time (if any) and telephone time to a minimum. It will be much easier for you to stay on track. They cannot require you to use their services, but they will do everything possible to minimize their losses (such as getting your loan). I have even handled the 1003 and credit to the bank/seller and asked my clients to put a release in their letter that all communications should be directed to their loan officer (me), trying to keep them out of the loop, deliberately. And then when push came to shove, the bank came back and said they could not release the letter to me or their agent due to privacy concerns and they needed the customer contact info....and then they went on to the (very) hard sell. (This so insensed one of my applicants, she spent half a day trying to contact someone in charge at a big box bank complaining about the employee's theft tactics, lol).
Just be ready.........oh, and another reason not to use the bank/seller - they have total control of the closing date. So, if they run over on the closing date, oh well. (The bank addendum covers them for this). Too bad if you have moving crews lined up, your loan is easily put on the back burner should another priority come along.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Which bank? We had a similar thing and we were all concerned about having to go with the seller's lender and the client went to a website and got "preapproved" in about 30 seconds.
It was really bogus, but everyone got what they wanted and the buyer used his original lender anyway.
I can understand if from one aspect. The bank being the owner doesn't want to get too far down the line and then you get turned down for the loan. If you pre-approve with them they can make the determination themselves if theythink that will happen.
Of course on the other side that was pointed out is you just gave them all your financial information. Will they use that to try and get you to pay more?
Which bank? We had a similar thing and we were all concerned about having to go with the seller's lender and the client went to a website and got "preapproved" in about 30 seconds.
It was really bogus, but everyone got what they wanted and the buyer used his original lender anyway.
The bank was Wells Fargo, and they did approve us Tuesday morning. Before we could submit the offer we found out that they had accepted another offer.
Back to square one.
Anyway we found another home that we like yesterday a block away from the one that got away. Our realtor informed us that this one is owned by Chase and guess what? They also want to have a preapproval letter. Currently their are no other offers on the home so we are hoping. LOL
I will check to see if I can do it online with Chase.
Last edited by SOON2BNSURPRISE; 10-20-2010 at 11:28 AM..
I went to the Chase site and was able to pre qualify online, or at least get the ball moving in the right place. The lender for Chase that I was refered to (and who has yet to call me back. LOL) has my information now. The Chase site allows you to send it to a loan rep in your area.
I am purchasing a foreclosure with Chase, and they told me if I went with them, I could get additional perks-but I chose to go with my own lender-they were all hurry, hurry in the beginning and right on top of things-even communicating on the weekend with us-but it has taken us over three weeks to get the original contract back signed, and now they have changed the dates on the contract in regards to closing, by crossing them out, and I am freaked out by the whole thing. I am getting so I don't trust any of these banks-who knew that purchasing a home would be so stressful?? It takes some of the joy out of finally getting your first home......
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