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!