Vail Daily column: What is unique about financing property in resorts?
I often get calls from borrowers who I know are shopping my services against large online lenders such as Quicken Loans or Lending Tree that primarily deal on the Internet to find their customers. Sometimes people flat out ask why should they deal with a small company such as Macro Financial Group because surely bigger must mean better. In fact, I hope callers do ask me that question point blank so we can have that discussion.
Every company has things they do well, and what I do have in common with the big name lenders is we both do our jobs well in terms of closing loans. I would not still be in business if I didn’t and nor would they. Where we differ is I close well over 95 percent of the actual loan applications I end up agreeing to take. Industry gossip is some large companies close closer to 25 percent of the applications they take, meaning they have a lot of disappointed people out there. I may have to tell a lot of people that inquire and would like to apply that I can’t possibly get them a loan, but large lenders instruct their employees to take every application they can get their hands on and then only 75 percent of them will be disappointed. It’s no fun turning down potential business, but I’d rather do it this way than the way the big guys do it.
Big name lenders are set up to advertise heavily, scoop up thousands of leads and do a huge volume of easy loans, those that turn out to be not quite so easy generally get lost underfoot, sometimes languishing for weeks without progress. Or worse yet, the lender orders (and charges the client for) an appraisal and asks the client to send in reams of paperwork before seriously evaluating the issues inherent in approving the loan.
Getting approved for a mortgage loan means meeting several sets of guidelines in terms of the property, credit, income, income stability and employment history.
Properties in the Colorado resort areas such as Vail, Beaver Creek, Aspen, Steamboat and Summit County are often some of the most challenging properties to approve in the country.
We have unique situations in terms of condominiums that allow short term rental (condo-tels), mixed use buildings, deed restricted housing, duplexes, planned unit developments like no other, geologically sensitive areas and log homes.
If you think Quicken is going to latch onto the definition of “deed restricted housing” without you explaining it eight times over, then you’re likely mistaken (and they may or may not be able to deal with it once it comes up). And don’t think that just because they didn’t ask at the time of application if the condo you are buying has a short -term rental program means that the issue will go away. It will show up after you paid for the appraisal and sent them a stack of paperwork.
If you think a big online lender will intuitively know that your place is a log home (and that won’t present a challenge to your loan approval), then you will probably get turned down well into the process after you have spent money on an appraisal. I know my local real estate market and if you mention you are looking at a particular home I’ll either look it up in the MLS or on the county records to see if there are any concerns.
Taking A Look At Income
In terms of income, many great hard working locals make ends meet by various means including numerous seasonal jobs, part-time jobs and roommate income. If you are one of these and tell some guy from Lending Tree that your income was, say $60,000 last year, then he’s going to assume you draw a nice tidy paycheck of $5,000 per month and he may or may not be able to make the numbers work (or be willing to spend the several extra hours it takes to document your situation) once he finds out you have six different income streams to get to that number. A local lender such as myself will quiz you about your income streams and job history long before making any indications of being able to proceed with an application.
Likewise, if you are a successful self employed individual buying a second home and pay your accountants dearly to scratch out every last dollar in deductions, here’s a little secret: Lenders are required to qualify you based on the net income, not the gross. I can’t count how many self-employed borrowers have told me they make a pile of money, and in fact they do, but they don’t pay taxes on most of it. When I hear someone is self-employed, the first thing I ask is for the borrower to send me his taxes to review long before I send him a 30-page loan application to sign or ask for other documentation.
The bottom line: If your lender is not asking many exacting questions and giving you the “sure we’re so big we can handle anything” story, then you have better keep looking and small is often better!
Chris Neuswanger is a loan originator at Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage related inquiries from readers. His blog and a collection of his columns may be found at http://www.mtnmortgageguy.com.