How Safe is Your Transaction?

With the new challenges buyers (and sellers) are facing when dealing with a mortgage loan officer or broker, here are some questions to ask the loan officer:

• Is the letter a true pre-approval or just a pre-qualification
• Has the borrower's credit report been evaluated (is it a "tri-merge")
• Is this a full documentation loan, if not, then what type
• Has the borrower's income been verified (a.k.a. VOI)
• Have sufficient assets to close been verified (a.k.a. VOF)
• Has the file been seen by an underwriter, if so, are there any conditions other than an acceptable appraisal
• Are you the approving lender or are you brokering the transaction (who's funding the loan)
• How long is the approval valid
• Are there any alternative programs if the loan program goes away and/or the underwriting criteria change
• Can you guarantee that this transaction will close on time

As a potential buyer, there's no sense even looking at homes for sale if you can't qualify. And as a seller, what would you say if you found out that your buyer couldn't qualify for a loan after accepting the offer and taking your house off the market for four to six weeks?