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Realtors Role in the Mortgage Process

January 26, 2011

Darren Smith, Mortgage Banker

From Darren Smith, Mortgage Banker

Realtors have a unique opportunity with homebuyers. You are their first point of contact. You build a relationship with them over time. They look to you for advice and guidance. When you understand the key aspects that make mortgage loan approval more likely, and share those with your buyers, more closings should result.

Set proper expectations.

We all have a short memory, so it’s no wonder many buyers think they should be able to buy a home and see instant market appreciation and increased home value. However, that isn’t typical for the US housing market. Inform them of this equation

Time + market appreciation + debt pay down = wealth.

The market has now adjusted back to this core equation, which requires buyers to invest time and money in their home in order to grow their equity and wealth. That may affect their decision to buy a home or move from one house to another.

Ask for essential details at the beginning.

Discuss the basics before you get too far along so you know if they’re ready to buy. Determine what their motivation is for moving, their credit history, and their finances. Once you have those answers, you’ll know if you can move forward or need to help them get their financial house in order first before they can buy a home.

Educate buyers on importance of complete and accurate information.

It seems counter-intuitive. A customer might wonder: How can revealing financial problems or setbacks to my Realtor® help me obtain a home loan?

Let them know that missing or incomplete information is one of the most common reasons for a loan to be denied. Even if a buyer has some past financial issues, lenders do have some latitude to work with buyers, but only if they know about specific situations up front.

Educate yourself on obstacles to mortgage approval.

Other issues that can lead to mortgage denials are: unemployment or short job history, lack of savings, and problems with late or missed bills. If your buyer is dealing with any of these problems, financing may be difficult right now. At that point, you may need to move out of the sales cycle and work with them on practical steps to fix the issues so they can buy with you in the future.

But, don’t try to be the lender.

There are simply too many details in the financing process that change frequently. Only a lender should address government program features and requirements, interest rates, and underwriting standards. Partner with one you trust and then work with him or her to help your buyers obtain the financing they need.,,

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