According to Vince Rinehart, St. Vice President of Firstline Mortgage and an Orange County broker for over two decades, Bank of America rejected a loan because the down payment came in the form of gift money.
(IJR News 9/26/2011) Rinehart was able to fund the loan using another bank with less restrictions in which Vince regards as portfolio lending. With borrower demand rising, and while some traditional banks keep a tight threshold on available funds, Rinehart has made more and more use of portfolio lending.
It is no secret that obtaining funding for home loans has been close to impossible the last three years. However, even in the current state of the economy, a down payment in the form of a gift is usually not frowned upon by banks. International Journalism Review (IJR) was somewhat shocked at this finding so we found it necessary to seek answers from one of the industry’s veterans, Vince Rinehart.
Rinehart told us, “Many banks are starting to loosen their grip on the constraints we have experience during the last three years or so. I have been in this business a long time, I have never relied on one bank to assign a client to but rather fit the best bank to my clients needs. For example, B of A rejected my clients gift money as a down payment even though he is a doctor, has great credit history, and makes a very good salary. Luckily, not every bank sees things as black and white, and I was able to fund this loan with another bank to satisfy my “very qualified” client’s request for a home loan.”
Rinehart told IJR that people should just do their homework when getting a loan by following a few basic rules. First, make sure your loan agent has at least five years in the loan business. By doing this it tells a client the loan officer has been through good times and bad and is still in the same profession, most agents left the industry when the real estate frenzy ended. Second, don’t assume your real estate agent has the best lender. Although Rinehart said a referral is great, he told us the realtor has an interest to get the loan closed not necessarily get the client the best loan.
Finally Vince told IJR, “Don’t be afraid to ask your loan officer for options or different types of loans available and more importantly ask them how many banks or lenders they work with? Some real estate brokerages have an in-house lender they try to introduce every client to, unfortunately even though they often sweeten the deal with incentives the client still loses out on options available if the slient were to seek outside lending. Often an outside broker can secure a lower APR or less fees even with the incentives offered by the real estate brokerage.”
IJR recommends that people looking to secure a loan thoroughly research their loan officer, their experience, and their history of closed loans. This is sometimes the largest financial decision a person or couple makes in their life, make sure to do your homework.
International Journalism Review / Senior Journalist