"How to Avoid Losing Your Home When Shopping For a Loan"

People who are seeking financing often times shop many lenders. Shopping lenders mean the following:

1. Applying with multiple lenders simultaneously within a certain period of time.

2. Applying for a loan with a lender, getting denied the loan and applying with other lenders till you find one who approves you.

Now here is the problem with this approach to getting you the loan you need.

Every lender you apply with, is going to do a credit inquiry to check out your credit report using what is called an in-file credit report. When a lender queries your in-file credit report, there is a notation on the credit report that leaves a track record of the lender performing the inquiry: lender name, date, etc...

When you shop lenders (banks and brokers) by communicating with multiple lenders, they will look at your credit file and wonder who has control of your deal. Too many lenders looking at your project at the same time can kill the deal, especially when using brokers who cross wires with lenders. This can be bad news for the borrower.

Let’s say you are seeking a debt consolidation loan and you apply with a lender who denies you. Then you apply with another lender who also denies you, and a third and  fourth etc.. You now realize that each lender will see that the last lender denied you a loan (or you wouldn’t be applying with the current lender, right?). Each lender will question why the last lender didn’t do your deal and red flags will start waving in the lender mind: If lender A didn’t do the deal, what’s wrong with the deal? And this process gets worse with each successive lender who looks at your credit report.

The lenders won’t do the deal because the other banks didn’t do the deal and that means there must be something wrong with you or your project, whatever it is. As lender keep inquiring on your credit, your credit score may even goes down. And if your scores goes bellow 500, then you are going to have even more challenge finding someone to approve you a for loan. If your Loan To Value (LTV) is higher than 70% (As an example your home is worth $100,000 and you owe $70,000) it will be almost impossible to find a lender. Hard Money Lenders won't give you a loan, unless you have at least 30% to 35% equity in your home.

How to avoid this from happening?

In certain situations the key to finding a lender is knowing which one is the best to approach to get you financing. Many borrowers don’t have this information and end up approaching the wrong lender thus eliminating their chances to get a loan. Those unfortunate borrowers may end up losing their homes, unless they sell their home before going into foreclosure. Investors will buy your home, but bellow market price and you will lose the equity you may have accumulated.

It’s what you don’t know that can hurt you.

To Your Success,

Andre Plessis

Andre Plessis
"The Mortgage Guru"
"A Mortgage Professional whose primary goal is to provide the expertise, guidance and skills necessary to obtain the best mortgage to meet your personal needs".
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P.S. If you are at all intimidated or unsure about the mortgage process if you don’t understand how to evaluate your options in getting a mortgage loan our 24 key questions will help you feel comfortable that you are making the best decisions. Also if you are in the process of refinancing your home with anyone, CALL ME and I will let you know if you are being offered the best loan option based on market conditions and your financial situation.

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