What Should a Realtor Do When a Buyer's Mortgage Is Approved from an Online Source

Benefits of local vs online mortgage lenders

More and more home buyers these days have their mortgages approved from online sources. Let's say you are a real estate agent and your buyer comes to you saying his or her mortgage is approved from an online sources. What do you tell them as a Realtor? Do you suggest they get approved again locally?

There was an online discussion on this question and here are some useful responses from real estate agents.

Candice Donofrio of Next Wave RE Investments replied, saying it's their call, but as a listing broker she will always advise the seller to give greater weight to offers financed by their trusted local lenders. Donofrio also ads that there are others thinking like her in their local area. "Do you want leverage or not?" she asks.

"If it's an unheard of lender and out of area, I suggest they get pre-approved from a local lender. It can't hurt to be pre-approved by two different lenders. With the new TRID regulations, it's best to use a local lender, suggests Jeff Pearl of RE/MAX in Leesburg, VA.

Joe Petrowsky, a mortgage consultant from the Right Trac Financial Group of Manchester, CT says it is always a concern. "I have had to pick up the pieces on many transactions that were approved by an online company," says Petrowsky adding, "certainly you can make the suggestion."

Praful Thakkar of Keller Williams Realty - Andover, MA
I usually ask for their online pre-approval letter. Now if they are referred, I work with them and ask them to get the letter ASAP from my preferred lender - nothing hard and fast, though. I know them most of the time - and I also know they are capable of buying a home.

Tammy Lankford of Eatonton, GA
If it's someone I haven't worked with before I make an attempt to reach them by phone and have a conversation. If that doesn't happen then I explain a LO being hard to reach can harm their loan.

Gary Coles - Venture Realty International - Las Vegas, NV
I tell them that other agents and sellers will have a lot more confidence if we use a local lender and when we are under contract, there are always items that need to be addressed by the lender -- and I stress that a local lender will be much better situated to help them.

Kevin May of Hobe Sound, FL suggests the buyer reading to him the entire document, which the buyer has been provided by said online mortgage lender. "I will tell them whether it's legitimate or not. It's that simple. If not I can direct them to more reputable sources," says May.

Troy Erickson of Chandler, AZ
I would suggest that they also get approved through a local lender, but I wouldn't force them to do it. My experience is on-line sources are not always reliable, and hard to contact when things need taken care of.

The Advantage of Local Mortgage Lender
Several other real estate agents also show from their responses that buyers need to be aware about the potential risks associated with online mortgage lenders. Apparently the experience with online mortgage lenders is not always great. The choice of the mortgage provider is, of course, the home buyer's choice. However, buyers might want to check with a local lender since local lenders know local codes and customs.

"I had a client with a Quicken Loan pre-approval and I was skeptical but called them and received excellent information. Since it was going to be a multiple offer situation, I suggested my buyer receive another locally generated pre-approval. The offer was submitted with both pre-approvals and it was accepted because of the local lender. My buyer chose Quicken and I will have to say I was impressed with their follow-through and timely response," writes Michael Jacobs, a Real Estate Agent from Pasadena, CA.

Patricia Kennedy of Evers & Company Real Estate, Inc. from Washington, DC thinks online mortgage lenders are good for refinancing, but for a mortgage her preference is with the local home loan providers. "I have them get re-qualified with a lender I know. I think that the online lenders are fine for refinances. But with a purchase with contract deadlines, they don't work so well," she says.

"On our listings, the seller insists that they get a pre-approval from our lender. They don't need to use them, but we need to be comfortable," writes Barbara Todaro of RE/MAX in Franklin, MA.

Home buyers are driven to online lenders because of their attractive mortgage rates, shown on their websites. Agents need to be ready to provide advice and show local alternatives if the online mortgage lenders fail. At the end of the day an online approval is better than no mortgage approval.

Comments

Submitted by Candice A Donofrio (not verified) on
Very nice article, Armen. It is so wise for buyers to have local, solid preapproval to give them an edge in negotiations. If the seller believes their offer is more likely to close escrow without headaches, they will give that offer more consideration -- especially if the lender is known to them and they can call or meet with them.

Submitted by tammy lankford (not verified) on
I've worked successfully with several on line lenders who respond to communication. it's my nature to trust people until they give me a reason not to do so. Thanks for the email letting me know You'd used my quote. And I have no problem with it. I stand behind what I say.

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