My brother just sold his home after 2 buyers backed out because of not getting financing.  How can this be, since they were pre-approved? Annie

Great questions! Its hard to guess why this would happen twice – once burnt and all that, but the main reason people can’t get a loan is that the loan officer was not thorough enough to begin with. This happens because some companies allow you to “apply on line,” and now even through texts?? And as there is no live person asking the questions and advising, it’s a fill-in-the-blanks thing. So when you are asked your income, the website does not ask if taxes are taken out of your check or not, and how would you know to tell? The online lenders ask the amount of the down payment, but don’t ask what the source is (big difference between loan programs like FHA versus Fannie Mae). It doesn’t ask you whether the other loan on the credit report is for your current house or a co-sign, and therefore cannot calculate your debt ratio properly. Those are just a few of the problems with on-line or a rookie loan officer (less than 5 year experience). Because a lot of buyers don’t get the loan in place before making an offer, these issues that are standard requirements of borrowing mortgage money can become roadblocks the average person doesn’t even know exist.

I recommend that realtors have a local lender with lots of experience vet any buyer’s offer to make sure that the loan is fully in place, and not a prequel masquerading as a pre-approval. They say buyer beware, but it’s also seller (and seller’s agent) beware.