House loan questions?
Fort Sill Army Wife asked:
My husband and I are thinking of buying a house. We go tonight to sign the purchase contract. My question is, our realtor agent told us we were approved for our loan, my husband spoke to the loan agent on the phone. Has anyone been approved this way? I asked if we were pre approved or pre qualified, the agent said we were approved and that he isnt allowed to write up a contract until the buyers have been approved. He said tonight we will go over the contract, give him the earnest money, then we have to see if the seller accepts our offer, if so then we go see the mortage company, and then finish the paper work. He said it usually takes 3-4 weeks. Why do we need to go to the mortage company if my husband was approved over the phone? Do they need to see him sign papers, or will they run another credit report and such. I have heard of people saying their loan fell through at the last minute. I dont want to get my hope up on a house then have the loan fall through. Im really confused, I know I can ask my realtor tonight…but im just curious now. Also we live in oklahoma if it matters
Karl
My husband and I are thinking of buying a house. We go tonight to sign the purchase contract. My question is, our realtor agent told us we were approved for our loan, my husband spoke to the loan agent on the phone. Has anyone been approved this way? I asked if we were pre approved or pre qualified, the agent said we were approved and that he isnt allowed to write up a contract until the buyers have been approved. He said tonight we will go over the contract, give him the earnest money, then we have to see if the seller accepts our offer, if so then we go see the mortage company, and then finish the paper work. He said it usually takes 3-4 weeks. Why do we need to go to the mortage company if my husband was approved over the phone? Do they need to see him sign papers, or will they run another credit report and such. I have heard of people saying their loan fell through at the last minute. I dont want to get my hope up on a house then have the loan fall through. Im really confused, I know I can ask my realtor tonight…but im just curious now. Also we live in oklahoma if it matters
Karl
December 3rd, 2009 at 12:08 pm
Cory
very common since the lender will need documents from you like pay stubs, tax returns, bank statements from all sources etc. Just don’t give a deposit that you are not willing to loose and always make the purchase conditional of formal underwriting approval so in case it does fall out for what ever the reason you get your earnest money back
I am a mortgage banker in Tn & KY
December 5th, 2009 at 10:55 pm
Johnny
Pre-approval does not mean final approval. Basically, it means the loan officer has enough information to determine that you qualify and are likely to get a mortgage. They will still need to verify employment and possibly income, do some follow-up processing (all of which takes time), and have you sign papers and give you required contract papers. Also, you will have to get an appraisal and get homeowners insurance (or at least make arrangements for homeowners – they won’t lend to you without it). If you are not putting 20% down, you will also need PMI – you can either get it from the title company/mortgage company or shop around – you can probably save money by shopping around yourself.
Also, the loan officer does not have final say. Even if he has determined you are mortgage-worthy, the application will still have to go to the underwriters, who are the people with the money. They will go over the application with a fine tooth comb, plug all the data into their risk models, and make sure you qualify based upon the requirements of the folks (investors) they represent. (Don’t be surprised if they come back for more information after it goes to the underwriters – what with the turmoil in the financial markets, they are sure to be extra careful these days).
December 9th, 2009 at 2:22 am
Douglas
Here’s the deal:
You apply for a loan and the bank says “Based on your financial situation, we will lend you up to X.”
Then you find a house you like and make an offer to buy it. If your offer is accepted, the lender will want to appraise the house to ensure they’re not lending you more than it’s worth. They will not loan you more than the appraised value of that particular home.
If you get past that step, the lender will run your credit AGAIN before the sale closes. If you do something stupid, like go buy $10,000 of furniture on credit a week before you close, the lender could well deny you based on the increase in your outstanding debt.
That’s just one reason why your loan can be denied.
And yes, you have to sign your loan papers. It’s a legally binding contract.
December 9th, 2009 at 9:26 am
Anthony
You are right to be worried. Many people are given promises over the phone by someone they never met…..and 4 weeks later were told “We are sorry….”. You might want to meet the lender in person before writing the offer. Then you can ask her if you are 100% approved or not.
December 9th, 2009 at 2:53 pm
Keith
As usual, ED is wrong.
You are preapproved which means that your credit was run and numbers have been run.
HOWEVER, until there is a actual home to put the loan on, the lender can’t approve you thru underwriting.
When underwriting approves you, you are 100% approved.
Make sure that the contract has a financing contingency and you will be alright.
December 12th, 2009 at 10:52 pm
Jean
If I am understanding your question you want to know if the realtor can tell you that you are approved? Your realtor unless he or his company is also a mortgage company or the lender for your house he would not or should not know if you are qualified unless you have told him.
I would then question the loan agent how much you are approved for. You don’t want to be put into a position of signing a contract and then finding out that you are not approved for that amount.
I guess what I am trying to say it is better for you to get pre-qualified or pre-approved prior to looking at houses. That way you personally know what amount you are approved for. The look at the houses in that price range.
Remember you are the one who is going to be responsible for the payment not your realtor who is getting a commission on the amount that you have the loan for.
Good Luck you are wise to question this. And like one of the other responses said, remember to make sure that the contract is contingent upon financing so that you don’t end up losing your earnest money.