Can I use my own lender??

Joel Montes de Oca via Compfight

I am going to do a few articles about the purchase process. It is a lot different than it was a few years ago and I am seeing a really different trend with a lot of my work right now.

It seems like every deal I am working on is having trouble due to lenders not being able to understand what the meaning is of the ‘time is of the essence’ phrase in our contracts. We put that in to make sure everyone knows that the dates we put down are important and we expect them to work within those dates.

Everything starts from ‘binding agreement date’. That is the date that all parties agree and have been notified that we have a deal. Simple.

Then we get to ‘due diligence’. A typical deal will have 10 days of due diligence time where the buyer may do inspections, surveys, research and decide if the property is one they want to purchase and if everything is as it seems. During that time you can request repairs, ask questions and if you find the property won’t work for you then you can terminate the deal and the buyer gets their earnest money back. Also simple.

The financing contingency gets a little tougher. More of the process is out of our control and turned over the ‘the lender’. Here is where we start getting in trouble. Lending has gotten tougher and is it notably harder to get a loan but frankly if you have a job, make enough money to make the payments and have reasonable credit, you’ll get the loan. The biggest problem is proving all that  to the underwriters in the timeframe given to us in the contract. Most of the time that is 30-45 days. Seems like a long time but what I see is a lot of waiting until the last minute.

I get lots of buyers who what to use a lender they already know or perhaps do the financing with a credit union or large mega bank. I cringe every time I hear this. At least for now it is hard to do business and get done on time unless you know the people you are working with and if the underwriters are in house. The closer the people sit together who are handling the loan, the more likely you are to be done on time. It can take days for the underwriter to review documents and get back to you and the whole time we are just waiting and trying to explain why we can’t close.

I just closed a deal today that was over 3 weeks late simply because the lender took forever to get anything done. Underwriters took 3-5 days to get back to us everytime they asked for something.

They made my list and I don’t mean ‘the good one’. I will advise any of my clients to avoid a deal with them.

We do this work a lot and get to know who we can count on and who we can’t. Sometimes it’s an unknown but more often than not that does not go well either.

I don’t get any sort of kickback or fee to recommend a particular lender but rather I do it to make sure we control as much of the deal as possible and to know it will get done right and on time.

So, at the end of the day, I would not prevent a deal from happening just because someone wants to use a lender I don’t know (or even one I don’t want to use) but I will certainly set expectations to make sure everyone knows what to expect.

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Thanks for listening,

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