What are purchase loans?
Purchase loan is handled a little differently than refinance loans. In a very competitive market such as this in the bay area, the confidence to close it and how fast you can close it can often mean whether you get your offer accepted. Since we do both real estate and mortgages, we understand what realtors and lenders are looking for, so we can make sure the requirements for each side is met (and usually up front by doing TBD, see below) to make it a smooth and fast transaction. We have many lenders that we work with, and we choose the one that meets your goal the best, with the lowest rate possible. Some properties may have special “characteristics” where only some lenders will allow. We put all those into consideration at the beginning to minimize surprises later on during escrow.
What is TBD?
Realtors often require some sort of pre-approvals to go with the offer (unless it’s an all-cash purchase).
The most basic is a pre-qualification letter. This does not mean much as this is calculated based on what the borrower/buyer tells the loan agent. How the buyer calculates the income may be different than how the lender calculates it (same goes for debts). As a result, this is not reliable so the more experienced realtors would not accept this.
The other one is pre-approval letter. Here, the buyer/borrower actually gives the loan agent all the relevant documents so the loan agent can calculate everything based on the common practice of most lenders. Obviously, this would be much more reliable than a pre-qualification letter.
We go one step further. If the scenario qualifies for the lenders who do TBDs (To Be Determined, meaning we don’t have a property address yet), we actually submit all the paperwork to the lender as if we are doing the loan. The lender will give us an approval based on that, so we can be sure the finance side of things is all good to go, and just pending appraisal and anything else that may not be available at the beginning (such as condo cert). It is easy to see why this is the most reliable form of pre-approval one can get. The other benefit is that since most of the paper work is already submitted, this can make the loan process even faster, thus the buyer can make an offer with a shorter close of escrow days, which most sellers and listing agents prefer.