Whether you are a listing or selling agent, insist upon a DU loan approval BEFORE you write or accept offers.
A “DU” is a computerized loan approval (Fannie – FHA –VA) that verifies buyers have completed the ENTIRE loan package and (when approved)
has assigned a “case number” by the underwriter, which virtually guarantees there will be no last-minute (buyer) surprises before COE!
The Disadvantages of “Prequals”
Pre-qual letters are only as good as the loan officer who writes them and the information they contain.
Does the pre-qual letter outline credit scores and Debt-to-Income ratios? Has the lender “sourced the funds” or estimated the COE? Have they reviewed the V.O.E.?
If not, you have nothing to rely on but a “best guess.” Many pre-qualification letters aren’t worth the paper they are printed on, and you’ve already experienced this!
With DU Approvals -You Take Control
There’s no more waiting for a return call from an MLO while an offer twists in the wind; instead, an agent already has the DU approval in hand.
Everyone focuses on opening escrow and meeting timelines. The loan contingency period is met (before inspections and appraisal fees are incurred), and COEs are timely and completed in 20 days.
Offers are accepted more readily, which means fewer property showings, less time for buyers to become discouraged in this seller’s market, and less time spent writing needless offers.
All parties avoid losing deals at the 11th hour of closing or AFTER many extensions.
Avoid Fraud! DU detects if a buyer is engaged in fraud before an agent or lender is unwittingly dragged into it.
Advantages to Buyers!
1) Movers and tradesman’s can arrive on time
2) Vacations aren’t lost; work & school schedules are maintained.
3) Buyers can utilize a shorter rate lock period and get lower rates.
4) Avoid earnest money loss
The Challenges of “DU”s
Few lenders “fully underwrite DUs” with a formal case number BEFORE a buyer finds a property, as the process is expensive and labor intensive.
Typically, it’s 3-4 hours of processing time
But in a seller’s market, as rising rates begin killing deals, isn’t “DU-ing” files the best alternative?
Given the explicit advantages of DU, is your current lender willing to DU your buyers? And if they want your business, is saying “no” really an option?
The Alternatives
Purchase transactions have more “moving parts” and contingency deadlines, taking up more of an MLO’s valuable processing time than refinance transactions.
If you don’t like referring buyers to lenders, you lose control over your transaction.
If a buyer applies with a big media lender, that brokerage usually has a “refi” business model that is advertising-driven rather than AGENT-driven.
Hence, the MLO often perceives the buying and listing agents as “one-and-done” transactions, so other files may take priority in their pipeline.
Bottom line: Without a personal relationship with an MLO, an agent’s and buyer’s transaction becomes another file in a queue.
Call Me for a Full “DU” Loan Approval
Before Your Buyers Begin Looking for a Home!
Daniel Dobbs (.org)
Dandobbs6@gmail.com
DRE # 00986886 …..NMLS# 307631
Copywrite © August 2018, Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and specific other noncommercial uses permitted by copyright law.
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