Do You Have a Backup Loan?
We have been in the real estate business for years, therefore we have seen quite a few tricks that lenders have pulled on borrowers who don’t know much. Although foreclosures have been at a rise and mortgages have gone up, this has had all of the homebuyers scared to use a borrower’s leverage of their credit to improve pricing and service. So, do not get discouraged but also know what you have as leverage. In all actuality, the mortgage lender needs you, the borrower in order for them to make their business. Sometimes, a “backup” loan provides the leverage needed to enforce the rules with these lenders.
Usually, what happens is you shop for a mortgage and find the best deal for you but then there is an interruption
…someone in the process other than you drops the ball and you’re approval or rate lock is invalid. You’ll hear all sorts of explanations from the mortgage broker but the truth is that he or she didn’t have a backup plan for you.
What the mortgage lender should have done was submit your file to more than one lender.
All mortgage brokers should double submit loans, but that doesn’t mean that they will. Most lenders require an upload of loan information, to their website, just to get pricing and eligibility that very same day.
Checking eligibility and getting price indications is our job as a borrower to let your lender know. You must be very proactive and keep the lender on his or her toes. You should also expect the lender to present you with at least 2-3 options for your mortgage financing. One way to ensure that you get the loan you want and in a timely matter, is to have a backup loan. The backup loan should require that you ensure that the lender submits the file to more than one lender.
There are a few parts to the submission process. There is the automated underwriting approval, which ensures that the lender receives 2-3 of those approvals from each borrower. Then there is the documented file submission. The lender should scan each file submission to a PDF, so that he or she has leverage. The lender should want the ability to use the backup options, so that there is a contingency plan with the original lender.