When looking to purchase or refinance your home mortgage, one may find it responsiblle to contact a mortgage company such as Winterwood Mortgage Group, LLC, for example, before considering a new home loan. Upon reaching someone for a pre-approval or new refinance, you may be told to hold off on any new debt and/or quitting your job. In fact, this is a normal policy here at Winterwood. Or, you may call up your bank and ask a few questions to which their responses may be similar - "You should keep your credit and income situation stable from this day forward until we close your loan, or else we may have problems."
So, in the interest of obtaining that new home loan, you begin to act as a responsible citizen - minding your P's and Q's - because only then will this transaction follow through. Like a team working together for one common goal, you agree with your Loan Officer that you will abide by his/her rules (whether your know it or not is in the paperwork). Moreover, the consequences of not could be catostrophic. Follow my lead here as I walk you through the Four Consequences of Not Listening to Your Mortgage Loan Originator. Grab your wine and cheese plate, this may escalte quickly.
I am a child of the 1990s. I went through elementary school in the mid to late '90s, then on to middle and high school in the early 2000s. As part of my Public School teachings, I learned what the acronym T.E.A.M. stood for - Together Everyone Achieves More - which holds true to this day.
Notice how this group of young people (I say young just based on their arms and hands and dress code) are preparing to take on their next challenge. They are all in with each other. That is EXACTLY how you should be as a party to a real estate transaction - ALL IN.
Work as a T.E.A.M. to achieve the final goal - to close on your new home loan. Whether you are refinancing (and working with the lender solely) or purchasing (then you have a much larger T.E.A.M. to work with), it should be your goal to win the race and complete the match. Let me start by breaking down the acronym one letter at a time. From there, you will get the consensus that failure is not an option if you work as a T.E.A.M.
T for TOGETHER:
For centuries, teams have existed in one way, shape, or form. Most of them have been on the battlefield. Then, sports were created. This Summer 2016, Rio Di Jinero, Brazil refreshed our minds on Olympic sports - first individual, then team. What do we mean by "Together" when it comes to a T.E.A.M.? The answer is simple - as a group of multiple unit entities, we unite "together" to act as one. The same holds true for mortgage transactions.
We are made up of five parties in purchase transactions - the Seller, The Seller's Agent, the Buyer, The Buyer's Agent, and the Mortgage Loan Originator. Each one works together to process the transaction. For instance, in an FHA transaction - Buyer utilizes a 3.5% down payment & Seller pays up to 6% concessions for Buyer to not have closing cost money to worry about at closing time - the Mortgage Loan Originator is working closely with all four parties to ensure the transaction is a success. First, the Buyer needs to have an inspection done on the property to find out what may be wrong with it, otherwise, it may not pass an FHA Appraiser's opinion of value right away. Once that inspection is done, the Buyer's Agent sends the information over to the Seller's Agent for review. The Seller's Agent then confirms with the Seller what will or will not need to be addressed to pass the FHA Appraisal the Mortgage Loan Originator has to order on the back end of the inspection report for the property in order to determine its value for the Investor. If there are issues with the terms of the repairs, the Buyer has every right to back out of the transaction. We never want to see that happen, but it could determine the entire transaction's health from the very beginning.
In another case of "togetherness" - the Seller is responsible for ensuring their property meets the guidelines for an investor to place a lien on the property in the form of a mortgage. The very first document that is signed other than the purchase agreement, itself, is the Sales Disclosure. This document - for a fee of $15 in Indiana - is then recorded after the Closing at the County Courthouse. It ensures there is nothing wrong with the property as well as informs on the current condition for tax purposes. Why is it important, you ask? Simple - lying on this form is grounds for real estate fraud, which can be a felony, which also comes with hefty fines. If the Sales Disclosure is not correct from the very beginning, we have attempted to dismantle the T.E.A.M. from the very beginning as well.
E for EVERYONE:
Everyone WILL Achieve More if they are working Together - that goes without saying. But what does "Everyone" need to do in order to make this happen? The answer may shock you - but I hope it comes as no surprise if you have been paying attention. "Everyone" should be forming bonds that do not break while the transaction is in motion. For instance, remember the Buyer's Inspection results from above? The Buyer will have formed a bond with the home at first glance, but upon further inspection, may have relinquished some of that bond. It is the Seller's responsibility to ensure that bond continues by coming up with a solution to the inherent problems they are facing post inspection. Through the work of the Agents on both sides of the transaction, this bond is put back in place with the home for the Buyer. Once that bond has been solidified, the Mortgage Loan Originator moves ahead in the transaction by ordering the appraisal and clearing further conditions of the loan. Together, Everyone is bonding. Not just the Buyer. Not just the Seller. Everyone -
From a Mortgage Loan Originator standpoint, it is my job to ensure the loan is completed on time. But, it is also the Buyer's job to ensure they have remained current with their debt payments, not changed any of their income status, delivered all documentation on time to me, as well as assisted in figuring out problems that may exist. In that process, I am forming bonds with the Buyer, but also with the Buyer's Agent. If my Buyer's Agent is well informed, he/she will be forming a successful bond with the Seller's Agent, who in turn bonds with the Seller. We all work together (Everyone) to ensure the parties are happy and excited about closing on the new home. After all, that is when the Buyer can start turning the new house into their new home. This makes the transaction enjoyable and memorable. Everyone wants a memorable transaction experience - as long as it is enjoyable and has zero problems! :)
A for ACHIEVE:
After we lay the foundation of togetherness as a T.E.A.M., we "Achieve" greatness as a T.E.A.M. by following the simple rules of Owning One's Actions I am about to outline below. Owning your T.E.A.M. actions means you are responsible for how it will function and what it will achieve in the end. The following is a list of what each T.E.A.M. member needs to remember while functioning inside a mortgage transaction:
- Mortgage Loan Originator -
- Should be communicating throughout the transaction - set the expectations upfront with both parties. Make them expect things in due time.
- Should be focusing on what is important for the Buyer - working with the Buyer's Agent to secure inspection times, results, etc. as well as ordering appraisals on time to make sure transactions close
- Should be considerate of the Seller's time - making sure when the transaction is ready, everyone knows about it ahead of time
- Should be listening to the Mortgage Loan Originator - making sure to follow every ounce of advice, including but not limited to -
- Keeping current job loan is approved with
- Not spending down payment money elsewhere
- Not incurring new debt outside of the new mortgage BEFORE closing
- Should be following the advice of the Buyer's Agent - making sure negotiations are clean as well as understanding some requests will be unrealistic
- Should never bad mouth, back talk, or otherwise get upset when the reason for the delay in closing your transaction is a direct result of a violation of one of the above rules. Not participating as a full T.E.A.M. member causes delays and frustrations that could have been avoided
- Should be listening to the Mortgage Loan Originator - making sure to follow every ounce of advice, including but not limited to -
- Buyer's Agent
- Should be patient - loans are not instantaneous, they are tedious. The worse the credit applicant, the harder the process will be
- Should be representative - meaning will take the bull by the horns on behalf of the Buyer and Mortgage Loan Originator to represent to the Seller's Agent and Seller their desires for a smooth transaction. The more cool, calm, and collected the Buyer's Agent is, the more relaxed the T.E.A.M. environment. This does not mean the Buyer's Agent can sit back and relax - they need to be pushing for the Mortgage Loan Originator like the Lead Blocker to ensure all parties are in the endzone celebrating a win in the end
- Should be patient - loans are not instantaneous. Buyers need time to work out their finances, but they need to understand their money will come to them in due time
- Should be willing to work the extra mile - unless a Buyer has unrealistic expectations for repair work, the Seller should be willing to make the transaction happy for the Buyer by completeing their list in the inspection report. I have found transactions with unhappy Sellers cause everyone to be unhappy - much like the old saying, "If Mom ain't happy, ain't nobody happy!" - well, the same goes for purchase transactions involving mortgages. It gets made worse by an unhappy Seller's Agent
- Seller's Agent
- Should realize their job is to ensure their Seller's receive the most money for their asset. After all, they have worked hard to build it. They need to sell it at a profitable margin because nine times out of ten, that Seller's Agent is also representing the Seller in a Buyer's capacity, too. It means more money can be used on a new purchase if the money received out of the prior sale was substantial enough. More money = bigger house = bigger commission check. I'm just saying. . . it's in everyone's best interest at that point
- Should be willing to be flexible - The most important aspect of a Seller's Agent job description is to sit back, negotiate the purchase price, fix the underlying property issues, and enjoy the ride to the closing table. The Seller's Agent need not worry about what's going on with the Buyer's loan - unless that loan has problems that just cannot be fixed. Trust me, no news is good news in this situation. When the loan is ready to close, you make every effort to close it as soon as possible. That is why you must be flexible, as the Clear to Close will come when you least expect it
M For MORE:
More. We all want it. Our society craves "more." But what does "more" do for you in a mortgage transaction? This answer may be more complicated than orignally thought, I mean, if you are achieving "more" by working together, what really are you "achieving?" I find that this answer aligns with the principal of "give and take." You get what you put into it, in other words. If we are to achieve "more" by working together, then we better be putting more into the team aspect of the transaction in the first place. Nobody likes working in teams where one guy does all of the work - unless you are the other part of the team benefiting from that one guy's work. Is it fair? No. Should it be allowed? Absolutely not. But does it exist? On a daily basis.
I find many of my team members during these transactions are leaning on me to throw my weight around instead of working with me to balance the weight distribution before the ship keels over. The "Achieve" section above highlights some of those problems I encounter with each party. Should you have one T.E.A.M. member talking to all parties involved and organizing all aspects of the transaction? I do not think so - because then you encounter conflicts of interest. Who's best interests are at stake when that occurs? It is certainly not the Buyer or the Seller - one of them is losing. That is why I condone single party representation. There is no room for negotiation. Do you want to achieve "more" by having your guy negotiate your wants to the same party, but then turn around and have the other party communicate their wants to the same party again? That's a circular conversation, not a negotiation. Chances are not good that transaction will end well. Consider receiving a diagnosis from your Doctor that you have a benign tumor on your brain. That Doctor then recommends surgery to remove it, but you know it is benign and does not necessarily need to be removed. You have no other Doctor to tell him your thoughts, so you tell him, yourself. Is there really negotiating power there? Or are you stuck with that Doctor's opinion? You need another expert's opinion in this case. That is what negotiation power boils down to.
We will achieve "more" by taking each responsibility as important as the other. One party to negotiate, one party to respond, one party to make the transaction follow through to the end. All parties agree on a closing date, one makes it happen on that date. We all are happy in the end.
Formally concluding this little ditty just does not exist as an option. Achieving More as a T.E.A.M. is an ongoing process because achieving success takes constant work. There are so many things that can, and will, go wrong inside a mortgage transaction - but, the T.E.A.M. actions together will prevent anything from becoming a real problem if it is handled as soon as even a hint of it raises its ugly head. The take away here is that you need to understand as either a Buyer or a Seller in a home loan transaction that you are a key component of how it will go. As I write this out, I have experiened the highs and lows of excellent and poor sportsmanship, respectively, in the last few months. My teams have had their ups and downs, but there is no greater feeling when they all cross the finish line in the end. Working Together so that Everyone will Achieve More is the only way to be effective in this business. Parties inside the T.E.A.M. greatly effect the third parties outside of the T.E.A.M. if the former is not functioning with the end goal in mind from the onset of the project.
I want you to achieve greatness as a Buyer and/or Seller. I want you to pick an Agent that will work for you, fight for you, and become your best friend even if you least expect it to happen. As your Mortgage Loan Originator, I want to send your loan through the best investor you qualify for, but I also want you to learn why you may or may not qualify for that "perfect" loan. Your dreams are out there. All you have to do is go get them. Listen to your Mortgage Loan Originator when he/she tells you what to fix with your credit. Listen when he/she says you are one underwrite from a Clear to Close and he/she does not have a timeline for when that will come out exactly. Listen when you are told to paint over window sills that have flaking paint - they will rot if not treated! But most importantly, do not think you are in this alone. It takes a Village to raise a barn - you need to learn that buying or selling a home is a marathon, not a sprint. That marathon is mixed in with a little baton passing as well. Each of us has our own job to carry that baton to the finish line.
Start the conversation below by sharing in your last home loan experience. What made the difference for you? Where did you see the most trouble? We want to know your thoughts. Share them with us - we promise not to laugh. Ok, ok. Maybe not if it's a real doozy. . . but hey, in over 20+ years of successfully lending money, we have heard them all!