1st Step In Home Purchasing Process ~ Working with a lender

The home buying process can be a little overwhelming if you look at the whole picture all at once.  If you break it all down into bite-sized pieces it isn't so bad.  This, of course, is not every single detail and all the details for each step, but it will give a potential buyer an idea of what to expect going into the process.

I want to start off by saying that it is most beneficial to have a real estate professional by your side as you go through the process.  This will help to have someone to explain each step, keep you on the right path, and fight your fight when it is needed.  

The very first step is to speak with a lender.  The lender is going to help you:

1. Make sure your credit is at an acceptable level.
2. Guide you if any changes need to be made to your credit.
3. Determine how much home you can afford.
4. Ultimately get you a pre-approval.

Let's look at each of these a little bit deeper.

Make sure your credit is at an acceptable level.  

What is an acceptable level?  Depending on the type of loan you are seeking, the lender has a minimum credit score that is required to get you approved. For an FHA loan, which is the most common and requires the lowest down payment, the required score is usually 620 and above.  There are some companies out there that will allow a lower score, but be careful.  They are going to require you to pay more on the loan.  

Guide you if any changes need to be made to your credit.

It's not the end of the world if your credit is not spotless or if you are below this score when you start. If you are working with a good lender, they will be able to look at your credit and make suggestions on the moves you will need to make to help recover that score into an acceptable score.  They will continue to monitor your progress and work with your real estate professional to advise when you get to a satisfactory level.

Determine how much home you can afford.

I know this sounds silly, but it actually a very important item.  The lender will look at how much money you make, how much money you spend and how much can be allocated towards a house payment.  You don't want to be in a situation where you are house poor, meaning all your extra money goes towards a house instead of other necessities.  So you want to make sure that you are looking at homes that are not out of your price range neither too high nor too low.  

This is also super important if you are wanting to keep your monthly payment within a certain range. Though you may be approved for a higher amount, you may only be comfortable at a certain amount each month.  

Make sure that you don't think that it is only how much the house costs that will determine your monthly payment.  In most cases, taxes and insurance are included into the monthly payment.  Your property taxes may fluctuate on a yearly basis as can your home insurance.  Be extra careful if you want to be at a certain amount.

Get your pre-approval.

Ahhhhh.  You have submitted the necessary paperwork to the lender including items such as current bank statements and paycheck stubs and the lender deems you to be worthy.  You will be issued a pre-approval letter.  The first letter is usually a generic letter that says that you are pre-approved for an amount up to $XXX as long as all of the conditions set by the lender are met.  This letter should be shared immediately with your real estate agent so it can be on file when you are ready to put in an offer.  A property-specific letter can also be provided when you are putting in an offer.  This specific letter will also reflect the amount you are offering on the property as opposed to how much you are approved for.  Great idea if you are not offering all they money you are allotted. 

Pre-Approval vs. Pre-Qualified

If you are super prepared, it is a great idea to get a pre-qualification letter as opposed to a pre-approval letter.  That sounds confusing right?  A pre-approval letter means that the lender has simply quickly viewed the documents you provided and they don't anticipate there to be any problems in the future.  A pre-qualification letter means that you have provided cold hard proof of all items necessary to the lender and there are no other issues after inspection and appraisal.  These are like gold for a real estate agent to have in their hands.  A lot of lenders are able to provide these and then only have to put in house information.  It will make your lending process go faster and smoother with little headaches.  You would be the hero of the day if you are prepared with this.

Get Your Ducks In A Row To Purchase

The Top 5 Things To Do Before Purchasing A Home

1. Talk to a lender for a pre-approval.  In today's crazy market, it is more important than ever to have a pre-approval before you start looking for a home.  This is so that you will be able to know how much home you can afford, but it will also show a seller that you are serious.
2. Know what you want in a home.  It is a good idea to be on the same page as your partner (if there is one) as to what you are looking for in a home.  The inventory is limited so you may not be able to get everything you are looking for in a home.  Know which items are negotiable and which ones you can not live without.
3. If searching on your own, use correct app/site.  We understand that buyers are looking for their home on the internet without the Realtor's help, and that's okay.  There are a ton of different sites out there that say they are able to help you search for your home.  Some of them such as Trulia and Zillow are not the best used apps because they don't have the most updated information.  You may have seen that if you found a house you really like and inquire about it that it is no longer available.  The best app / site to use is Realtor.com because it is directly fed from the MLS system that we agents use.  This allows the most up-to-date listings as well as taking off the ones that are no longer available.
4. Trust your agent's advice.  Believe it or not, we know what we are talking about lol.  Realtors take an oath and have to uphold what is best for our clients.  We don't worry about our commission which is a misconception.  We really try to find exactly what you are looking for at the lowest price, in the best condition, in the shortest time frame.  And that brings us to number 5.
5. Be realistic.  As I stated before, we are under limited inventory and we are not able to get everything that you are asking for.  We are also here to guide you on the price and will figure in when a closing cost is needed.  We absolutely HATE to send over a lowball offer and ask for closing costs as well.  It makes us look silly and it makes the seller not consider your offer seriously.  So when we try to guide you through the process and let you know where we feel you should be, please understand that we are doing all of this to help you get the home of your dreams!

If you're curious if now is the right time to purchase a home or would just like to ask questions to a knowledgeable team, contact us and we will do everything within our power to help you! 

I Can't Buy A House Because My Credit Sucks!

You wouldn't believe how many times I hear this!  And the scary thing about it is that it's not always true!!!  There are a few different reasons why people think this and there are solutions too.  Here are a few.

1.  There are many different avenues out there that promise to give you your credit score / FICO score.  What most people don't understand is that the formula that goes into creating these scores are not the same ones that go into the scores that a lender look at.  Don't just jump to the conclusion that it's not good enough.  

2.  The last lender that I spoke to said that I cannot get a loan.  This very well could be true.  However, each lender has different credit scores that they are allowed to accept and they also have different requirements for what can be on your credit before they accept / deny you.  I am lucky enough to work with amazing lenders that are able to help people every day get a loan for their home.

3.  I have student debt / medical bills that are bringing my score down.  Again, this goes back to the statement in #2.  Every lender is different and there are some lenders that take this into account when they are looking at your account.

4.  I haven't been at this job long enough.  If you have a job history of 3 years but it hasn't been at the same location, sometimes that is okay.  It is a matter of if you bettered your job, if you stayed within the same field of work, etc.  

5.  I don't know what my credit score is!  I wish that people would just sometimes say this straight.  Just like this lol.

I am sure that there are many other reason that could be put out there as to why someone isn't able to get a loan for a home.  The answer is something that we all know but don't live by...you don't know until you ask.  But it doesn't stop there.  You have to ask the RIGHT people!  The lenders that I work with are more than willing to take a look at your credit and give you an honest answer.

I am currently working with someone who had visited me at an open house for a rental.  She thought that she wasn't able to purchase a home but took the chance to speak with one of my people.  He looked at her credit, found there were only a couple of things that she needed to do to get her score up.  She listened and within a month we are looking for her 1st home for her and her family.  It really could be that simple.  But, it's not always that way.  I'll take off the rose-colored glasses for a moment to say there are going to be some instances where it just isn't possible.  Again, you will never know if you don't ask!!!!

If you're willing to take that leap of faith and find out ~ no obligations attached ~ if now could be the time for you to purchase your home, Just click this link I Want A Home with the same words as your Subject and I will send you over the list of my trusted Lenders that can get the job done if at all possible.  Don't delay.  We could be searching for your next house tomorrow!

The Basics of a Short Sale

What is a short sale?

A short sale is when a homeowner is no longer to make their house payment and are behind but don't want to just walk away and give it back to the bank OR when they have a hardship.  The owner must ask the bank for permission to sell the property at a lower price than what they owe on it because it won't sell for the balance of their loan.

Why won't the property sell for that amount?  This happens for a few different reasons like:

• There are multiple loans on the house.
• The neighborhood is selling for less now than what it was when the property was purchased.
• The home is in disrepair and would not sell for a higher price in the condition it is in.

What is a hardship?

• Unemployment / Reduced Income
• Divorce
• Medical Emergency
• Job Transfer Out of Town
• Bankruptcy
• Death

Information on submitting an offer on a Short Sale

• An offer will be presented to the seller of the home to accept or deny.
• The amount that the bank will accept is not known to the seller until they submit their first offer.  Just because the house is listed on the market for a certain amount does not always mean that the bank will accept that amount.
• Banks will want to receive an offer somewhat close to the market value.  These are typically not sold for way below that market value.
• Buyers may wait a very long time to get a response from the bank.  There is no set amount of time that a bank has to respond with an answer.
• An offer can be recanted at any time as long as it has not been accepted by the bank.
• There is a little bit more paperwork that is involved with a short sale.  It is all provided to you when a bid is submitted and turned in as one packet.
• The bank is requiring to have a pre-approval letter submitted with bids. 

The Short Sale Process at the Bank

• Bank acknowledges receipt of the file.  This can take 10 days to a month.
• A negotiator is assigned.  This can take 30 to 60 days.
• A BPO is ordered.  This means "broker price opinion".  Companies hire a real estate broker to prepare an opinion of the value.
• A second negotiator may be assigned.  This can take another 30 days.
• The file is sent to review.  This can take 2 weeks to 30 days.
• The bank may then request that all parties sign an Arm's Length Affidavit.  This means that you don't personally know the seller and are trying to assist them by purchasing the home.
• The bank issues a short sale approval letter.

Some short sales get approval in 6-8 weeks after an offer is submitted.  Others take 90-120 days, on average.

This is a buyer's market

Right?!?!

Wrong!  This statement hasn't been true for about 1.5 - 2 years now.  Things have slowly been turning to where it is now a seller's market.

What does that really mean anyways?  The difference between the two is where the supply and demand is.  

                  Previously, there was an abundance of houses available and not enough buyers for them all.  This meant that the buyer was able to be very choosy over which house they wanted and were able to get the seller to agree to almost anything if they really wanted to sell their home.  A buyer's market.  

                 Now that the excess foreclosed homes have been purchased, the interest rates are down and the sellers were so scared due to media coverage, there are not as many homes that are on the market and available to be purchased.  Buyers are having to sometimes fight for the house that they want and don't always win.  Sellers are able to ask a higher price and get it, offer less upgrades and have their house on the market for a shorter amount of time.  A seller's market.

How does this affect me as the Buyer?

                 The biggest way that this leaves an impact is that the buyer now has to add in additional time.  Before the buyer was able to find a home very quickly and get the process completed in 30-45 days.  This time period of looking and bidding is now longer because they are not always going to get the first one that they are putting an offer in on and there is sometimes more negotiations than before.

                 Another thing is that they buyer has to be willing to settle a little bit more than they did before.  You can't make demands upon the seller and expect to be the winner in that battle.  When you are putting an offer in on a property, you have to bring your best offer first because you don't know how many other offers may already be in or will be following yours.  Sellers are saying No now.

                  Please be realistic!  We try to explain to you that there are a low number of homes available to choose from but you still have a very specific list of items that you are expecting us to produce, it makes us look like we are not doing our jobs when in fact...it's just not possible!  Make a list of the items that are the most important to you.  Your agent should be able to put all of the items in and slowly remove items to open up the possibilities that are out there.  Just don't give her a hard time for not being able to find you everything you are looking for in that dream home.  (You could always build new then lol)

What can help get my offer picked?

                  As I stated above, bring your best offer first.  This is not a time to give the seller a low-ball offer and think that they will give you a counter offer.  The sellers are confident enough now to say no and have no problem waiting for the next offer to be presented.

                  Make it a clean offer.  What this means is that the more requests that you are adding into your offer, the muckier it gets.  This could include items such as closing costs, appliances, window coverings, furniture, washing & dryer, home warranty, points & pre-paids, having a closing date that is beyond a reasonable time period, possession date, etc.  The more things that you ask of the seller, the more likely it is that they will say no.

                  Pre-approvals are soooooooooooooooo necessary.  Hopefully you have spoken with a lender before you even started looking for homes.  If not, shame on you because you may have just cheated yourself.  I am going to have another post dedicated just to pre-approvals so you'll want to make sure that you watch for that to see why they are so necessary.

                   Closing costs.  This is a subject that I always have a lengthy discussion with my buyers about.  Your lender should be able to give you a pretty good idea about what this number will be.  It is a negotiable amount that can usually be asked of the seller to pay to help the buyer out.  The amount differs depending on the type of loan that you get.  BUT, don't ask the buyer to pay closing costs after you have just insulted them with a really low offer.  This is not the way to get your offer picked!

I know that this isn't a complete list of everything that you should and shouldn't do, but hopefully it has given you a good idea of why this is now a seller's market and what you can do to get that home of your dreams purchased!

           

Welcome to the New Year!

It's a New Year and this is YOUR year!  This is the year that you are going to keep every single resolution and that you are finally going to buy that new house, right?

Awesome.  Let me be the first to help you out with that :0)  This really is going to be the year to buy.  More sellers are finally realizing that they are able to get the most out of their homes.  You're not going to be seeing a lot of rent with the option to buy and rental pricing is going to be increasing too.  Why keep making someone else's mortgage payment and getting nothing for it?

In 2014, I worked with 2 buyers that started out thinking that they were not able to buy a home.  They thought that their credit wasn't good enough and that there wasn't going to be any homes in the price range that they were going to be looking in.  Thankfully they were smart enough to call me and have the discussion about it.  I work with a variety of different lenders which allowed me to find the perfect match for them.  And guess what, they now both own homes!

Don't discount it.  Let's get this year started off and get you into a new home.  You never know until you ask, right?  Call me and ask!

The Perfect Holiday Gift: A New House!

How many of you read that title, said "Yeah right" but had to read more any way?  Was that you?

Well never fear because it definitely could be a possibility!

One of the reasons that I am given most (after credit) when asked why someone isn't buying their own home instead of renting is that the potential buyer doesn't have the funds for a down payment.  

I have a couple different solutions that could help you this holiday season to buy your very own home as your present.  And I know the perfect Realtor to help you find that dream house :0)

There are loans out there that don't even require a down payment.  Some people don't even know this.  

• USDA is a loan that is offered in rural areas.  There are requirements on the price of the home and an income cap that you have to meet to qualify, but it could be a good thing to look in to.  
• VA loans don't require money out of your pocket either.  Of course there are items that have to be met in order to get one of these.

When talking with friends and family about your wish list, ask them to simply make a deposit into a savings account that you are using as your down payment money.  This is something that is completely acceptable and will be recorded by the bank about who the transactions are from.  Speak with a lender first, but for most this will be satisfied as a gift letter.  Parents, grandparents and older family members will usually be especially responsive to this and may give more than $20 if they know that you are using it towards something for your future.

If you would like other creative ideas about getting the money down for your home, contact me today and we can work together to figure out a way to help you.  Remember, FHA loans are usually on 3% of the purchase price ($100,000 home purchase price would only require $3,000 down).

Happy Holidays!