How long can we shop around ?

[Anonymous]

We had that with the 1st lender we were working with. Not with lender #3. This has all happened within the last few days. 

[JVille]

You need to make Formal Application and pay fees ASAP. Read your contract, depending on when your offer was accepted you had probably 3 business days to make Formal application. You may already be in violation (default) of your offer. Next you only gave # of days for inspections (10 to 14 days is common) those exact terms are also spelled out in writing on your contract. Please get your accepted offer out and read it!

Because your agent has both sides of this transaction he is LESS likely to do anything to blow this transaction up. That will work in your favor as long as he/she feels comfortable that you will actually qualify and be able to close escrow. Once again when he makes contact with the lender used to write the offer (your pre qual letter) this Agent is going to go ballistic when he is told your loan was declined. That’s why it’s so important to get your Full Application in ASAP.

You asked how much time you have, you are out of time!

[Anonymous]

We got the inspection done two days after the offer was accepted. The contract stated we would have a preapproval with 4 days which we did on day 1. From 2 different lenders. I don’t see anything in the contract about having an  application and fees paid within a certain amount a time. 

And technically we we didn’t get “denied” from original lender. She just said we would get approved only at at least 13% down which we don’t have. She gave us the disclosures and gave us time to decide. 

[JVille]

If you did not make Formal loan application in the 4 day period (or 4 business days) you are absolutely in default. It’s time to get it done.
I would strongly suggest getting out your contract and reading the fine print a bit more closely.

[Anonymous]

There was a formal application with the first lender. That’s how we got a full commitment letter. 

Ive looked over the contract and see nothing about a formal application. Just the preapproval. But That doesn’t necessarily mean we have to proceed with the original lender? And since it wasn’t a a full denial LO decided we needed 13% instead of 5% as she preapproved us before. 

[JVille]

You need to get an application in somewhere ASAP. What you got was a Counter Offer. As I said your Agent will freak out when he calls that lender for an update only to find out you have no application pending. That’s why you need to now go with the one you finally say they can get it done. If your contract is a typical Contract used by Realtors all across the country the details for making application are “preprinted” and spell out your obligations as a buyer who is obtaining a mortgage loan. And if you are indeed getting a USDA Loan there is an extra layer of approval process and 45 days is marginal for getting the loan thru even with no hiccups or UW requirements.
Best advice to get this done is to stop messing around now that you have a lender who says they can get it done. Your file will not get to a formal UW process or have your USDA funds reserved (yes every year they run out of money) without making Formal Application.
I made loans (and was a DE FHA Underwriter) over a very long 30 yr career.

[Anonymous]

Why would my agent contact the bank directly instead of talking to us to see how things are going? We have the standard purchase agreement that’s typically used. Canyou tell me what line it’s stated we need to have an application in? 

Also closing is on or before July 1 so if we start the process Monday that puts us at 45 days to close.  All we need is for them to accept our emplyment gap explanation. We are DEFINIETLY scrambling to make this work ASAP! 

Thank you you for your knowledge! 

[JVille]

Your agent will contact the Lender for an update and to touch bases. Confirming formal application is made and time line for appraisal. Appraiser needs access and usually they contact the Agent for access. As a Lender I spoke to Agents more than anyone because they are worry worts and control freaks. Then they love to threaten the lender if they even think it might not close on time. Then there are the agents who have deals tied to the house the seller is buying calling to back sure the Buyer (you) is as well qualified as they have been lead to believe.
Trust me Realtors can be lunatics and most of my best friends (including my daughter) sell real estate.
So to recap your agent WILL call your lender before calling you. They will want to lender to tell them every thing is going right along on schedule with the appraisal scheduled for ———, and the lender sees no problems. Notice no personal info is relayed but just warm fuzzies. Of course this is not what will happen when the agent calls the lender you got your letter from. He will call you in a huff (or panic) at which point you will give him your new lenders name & phone #.
On the other hand you Agent May be a lazy idiot and never follow up... but as he is Double Siding this it would seem he would babysit the deal a bit.

[JVille]

Good Luck and get that App in on Monday

[CreditInspired]

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@Anonymous wrote:

So we are in tough predicament right now. I have another thread about being preapproved twice and then denied a week later after our offer was accepted. We don’t want to lose this house. We have set to close by July 1 so we are going to give it some time to straighten things out. 

I contacted another lender yesterday who said they think this loan sounds doable and is trying to make it work for us. I’m pretty much going down the list of lenders trying to see someone who can help us. It doesn’t seem impossible. All the numbers and factors say we qualify but the automated underwriter says risky. 

Is it ok to just keep finding someone who’s willing to take the risk? We don’t want to lose out on this perfect home for us. We are also working on things to make it better like paying off a credit card which will boost scores and lower ratio a bit. 

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Hi OP

First, I want to say that JVille has given you solid advice and I want to give you some more but I'm going to try and not scare you to death but ask you to consider where you are right now and the Seller's predicament.

Second, JVille is absolutely correct about this point -- when the seller finds out, not only will he/she go ballistic, he/she will also go ballistic on the Realtor because the Seller is paying the Realtor (and on top of that paying one Realtor double commission!) Also, the seller's home has been off the market!!!

So here goes:

1.  When your entered into the contract with your preapproval letter, the seller accepted your contract based on those financing terms. The buyer cannot then go back (without the Seller's knowledge and acceptance of any new terms) and decide, oh well, since lender #1 can't approve me for the FHA loan, let me try lender #2 and go the USDA route, or try lender #3 for a conventional loans (these are hypothetical). Each type of loan has its own set of rules and for this reason, a Seller may prefer to deal with a cash buyer over say a FHA buyer, or a FHA buyer vs. a USDA buyer.

2.  Since you are not notifying the Seller and/or the Realtor of your inability to get a loan (and yes, you have been denied if you cannot fulfill the requirements of getting a loan) -- more on this in #3 below -- you will most likely lose your Earnest Money Deposit because you are not fulfilling the terms of the contract.

3. In order to get loan approval, many factors are in play -- do you have the funds readily available or a letter from your 401K stating that you have those funds? Is your DTI within the guidelines? Are there any derogs that need to be addressed, etc. These are not questions I'm asking you to answer, these are just all the variables that come into play on whether your loan will be approved or not. Any one of these will cause a loan to be denied. Matter-of-the-fact, NFCU would not even give me a pre-approval (only a prequal) because I didn't have all the funds in my bank account. Once they received documentation from my 403b that I had the funds available to close, then and only then, did I get the approval.

4. I ask you to please put yourself in the seller's shoes. His/her home has been off the market (they could have found a qualified buyer). It is a professional courtesy to notify the seller and Realtor of your impending and dire situation. At least this allows the Seller the choice to extend and/or change the terms of the contract to work with you if they so desire. However, if Seller believes deceipt is taking place (even if it isn't), they will not want to work with you. Period. Communication is always the best policy.

5. As JVille said, there are time limits and I don't know what they are in your state. But I'm in VA and once my contract was ratified, I had 7 days to get final loan commitment. I had 10 days to get a home inspection. And, I had 22 days to get an acceptable appraisal. 

6. Oh, and yes, my Realtor most definitely was in contact with my Loan Offer, the listing agent, the home inspector, the appraiser, the HOA, and the settlement attorney, and vice versa.

GL2U