I Am Trying To Buy Your House, So Why Are You Making Me Jump Through Hoops?

For many buyers getting a pre-approval for a loan is a stressful, daunting process. You are essentially handing your life (on paper) over to a complete stranger who is going to comb through it with grave attention to detail and scrutinize it in every way possible. It makes you uncomfortable, undoubtedly. You are finally done- letter in hand and a smile on your face. Now you've found your dream house- but wait! Your agent breaks the news to you: "This house is owned by (insert name of "big bank" here) and they require you to submit a SECOND pre-approval from ONE OF THEIR LOAN AGENTS  before they will review your offer". Suddenly the anxiety rises up in your throat again- you think to yourself "Again? I have to go through this AGAIN? How could this be?"

The fact is that this practice has become commonplace in the Modesto area with the volume of foreclosures we have been seeing. So, that begs the question, why do they do that? 

The answer is a simple one: Money. They have already lost boatloads of money on the house you are trying to buy. They are trying to recoup some of that loss by hopefully converting you to a borrower in addition to selling you the house. They can recoup the loss through the long-term servicing of your loan. (i.e. you pay them interest for the next 30 years).

One very important thing to remember though- if they accept your offer after you jumped through their hoops, they CANNOT make you use a specific lender. You have the right to choose. 

Is it annoying? Yes. Is it a pain in the rear? Certainly. Is it of any benefit to you? Sort of. It is a good way to get a second opinion so you are confident you are getting the best pricing and terms available. Also, it could mean getting into your dream house!

For more information on the loan approval process or a referral to a loan agent, please contact me via telephone at 209.614.3303.