I spoke about this not too long ago and it has come up again. I’ve been working with a client and have pulled credit and looked at 2 years income, so I know the applicant pretty much inside out to make a good analysis. I also talked to him about budget and what is a comfortable payment etc. It happened to be about the top of where he could obtain financing, $325-350k purchase.
He was really wanting to make sure he gave his bank a chance. In which I said sure of course go and have a look. He came back to me a couple days after and asked ‘how come my bank has told me I can get up to $460k for a purchase?’ My mind started going and I figured it out quickly….they didn’t pull credit or do a full check in. They saw his income and that was it. Based on his income and a fantastic credit score, with no debt, yeah he could go that high. However, the bank would not have known if they didn’t pull credit that it should be much less. His credit score was a bit lower (meaning less purchasing power) and he has a $585/m car loan.
His bank assured him he could by for this higher amount and to go shopping. The client ended up saying to me ‘wow, I can’t trust them. Let’s move forward together’
Imagine being the realtor and the client looking for this price range just to be told you can’t do it even though you thought you could as the bank said so?
Unfortunately I see this often and I can’t stress enough to you that you as a realtor really need to have this conversation with the clients banker and not just take their word for it…it’s too important no to!
Thank you so much!